Federal Reserve

  • 2019-04-18 10:45

    By Jean Yung

    WASHINGTON (MNI) - The U.S. economy is on track for continued growth and for inflation to remain near target after the Federal Reserve suspended its three-year tightening campaign this year, Richmond Fed research director Kartik Athreya said in an interview Wednesday.

    He added that domestic risks look benign relative to uncertainties from abroad and dismissed concerns that a brief inversion of the three-month-10-year yield curve last month portended a near-term recession, noting that negative term premia have been a drag on long-term rates.

    "Things are coming back to where one would have expected them, and it's not warranted to put a great deal of weight at this point to a recession or a significant downturn.

  • 2019-04-16 10:51

    --Repeating Story Initially Sent at 7:50 ET/11:50 GMT Tuesday

    WASHINGTON (MNI) - The Federal Reserve wants to boost its holdings of short-term Treasury bills to give itself flexibility to stimulate growth in another downturn, but officials are wary of moving too quickly for fear of distorting markets, Philadelphia Fed economist Roc Armenter told MNI.

    Owning more bills would allow the Fed to quickly reinvest maturing proceeds into longer-term debt to stimulate markets, a la 2011's Operation Twist, in which the Fed sold $400 billion of short-dated bonds and bought longer-term Treasuries to lower long-term rates and encourage people to invest in riskier assets.

    It would also permit the option, if necessary, of more quickly shrinking the Fed's balance sheet -- b

  • 2019-04-11 11:32

    By Jean Yung

    WASHINGTON (MNI) - U.S. growth and inflation indicators would need to deteriorate relative to the Fed's forecasts for officials to consider an interest rate cut, Federal Reserve Bank of St. Louis President Jim Bullard said Thursday, adding that he's uncertain about the economy's performance so far this year.

    His remarks come on the heels of Wednesday's publication of the minutes of the FOMC's March meeting, in which a majority of officials said the current level of rates appear to be appropriate for the rest of the year.

    "The (Summary of Economic Projections) is essentially saying if the economy evolves as expected, we would not make any changes in 2019," Bullard told reporters after giving a speech in Tupelo, Miss.

  • 2019-04-10 11:50

    By Jean Yung

    WASHINGTON (MNI) - Federal Reserve Governor Randy Quarles on Wednesday urged financial institutes to accelerate their transition toward alternative risk-free rates including the Secured Overnight Funding Rate and away from LIBOR, warning LIBOR use could end in two and a half years.

    Speaking on the one-year anniversary of the New York Fed's publication of SOFR and other new risk-free rates, Quarles noted substantial progress in the adaptation of the new rates.

    SOFR futures saw more than $7 trillion in cumulative notional volumes since they were created, a crucial development for market liquidity that's spurring the growth of SOFR swaps and other derivative markets, he said. Over the past year, $81 billion in SOFR-linked debt were also issued.

  • 2019-04-04 13:00

    By Jean Yung

    WASHINGTON (MNI) - U.S. interest rates may need to move a bit higher if growth picks back up to trend or higher, labor markets stay strong and inflation remains near 2%, Cleveland Federal Reserve Bank President Loretta Mester said Thursday.

    "I see no urgency to change our policy stance" given rates are at the bottom of the range of estimates for the neutral rate and "little sign that inflation is poised to rise appreciably despite the strength in labor markets," Mester said.

  • 2019-03-29 15:01

    --Repeating Story Initially Sent at 12:24 ET/16:24 GMT Friday

    WASHINGTON (MNI) - A higher-than-expected U.S. labor force participation rate, which Fed policymakers have viewed as a sign the economy can support faster growth without needing higher interest rates to tame inflation, is only a small deviation from demographic trends, Federal Reserve Bank of San Francisco economist Marianna Kudlyak said in an interview Wednesday.

    The percentage of the U.S.

  • 2019-03-29 12:05

    By Jean Yung

    WASHINGTON (MNI) - Federal Reserve Governor Randy Quarles said Friday that higher interest rates may be appropriate at some point even though he is content to patiently watch how data evolves for now.

    "I am very comfortable remaining patient at this point and monitoring the incoming data. That said, my sense is that further increases in the policy rate may be necessary at some point, a stance I believe is consistent with my optimistic view of the economy's growth potential and momentum," he said in a speech prepared for a financial markets conference in New York.

    His estimate of the neutral policy rate remains "somewhat north of where we are now," he added, citing gains in investment, productivity and labor force participation over the past year.

  • 2019-03-26 15:05

    By Jean Yung

    WASHINGTON (MNI) - Signs that inflation expectations are drifting lower bear close watching as it both raises the risk of deflation and hurts the Fed's credibility, Federal Reserve Bank of San Francisco President Mary Daly said Tuesday.

    "While there is no sign today that the anchor has drifted down significantly, we are seeing signs that inflation expectations are edging lower," she said in remarks prepared for a business group in San Francisco.

    "We need to be vigilant on this front, and work to deliver 2 percent inflation on a sustained basis. The Federal Reserve's continued credibility with consumers and businesses depends on it."

    The Fed has yet to meet its 2% inflation target on a sustained basis, she said.

  • 2019-03-26 14:33

    --Repeating Story Initially Sent at 12:59 ET/16:59 GMT Tuesday

    WASHINGTON (MNI) - The rise in the fed funds rate over another key rate could speed up a resumption of the expansion of the Federal Reserve's balance sheet, an economist at the Kansas City Fed said in an interview, after the Fed's benchmark breached the interest it pays on excess reserves for the first time last week.

    The effective funds rate could rise up to 10 basis points above IOER before balance sheet normalization concludes, Lee Smith told MNI, adding that the upward drift is a signal that reserves scarcity is beginning to bind.

  • 2019-03-25 13:00

    By Jean Yung

    WASHINGTON (MNI) - The Federal Reserve does not have the appropriate tools to promote a low-carbon economy in the fight against global warming even as the effects of climate change on the U.S. economy merit study, a San Francisco Fed paper argued Monday.

    The Fed can neither fine tune its short-term interest rates to support wind farms nor can it use its balance sheet to buy low-carbon corporate bonds, the bank's executive vice president, Glenn Rudebusch, wrote in an Economic Letter.

    "Such 'green' quantitative easing is an option for some central banks but not for the Fed, which by law can only purchase government or government agency debt," he said.