News Regulators 

ECB board member says normalization of interest rates will be gradual

“Yves Mersch, a board member at the European Central Bank (ECB), told CNBC that the central bank will be gradual with its return to normal monetary policy” writes Daniel Roland for cnbc.com. The central bank also said that it will extend its program until at least September of next year.Despite the improved macroeconomic conditions in the euro zone, the central bank believes that it cannot yet put an end to monetary stimulus. Source: cnbc.com Share This:

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Markets News Regulators 

Top central bankers vow to talk investors out of easy money

“Then-Fed chair Ben Bernanke famously sent global bond markets into a tailspin in May 2013 by suggesting that bond purchases could be reduced” reports cnbc.com. “Why discard a monetary policy instrument that has proved to be effective?”. Four of the world’s top central bankers promised on Tuesday to keep openly guiding investors about future policy moves as they slowly withdraw the huge monetary stimulus rolled out during the financial crisis.To do this, words will be key, the heads of the four central banks told an ECB conference on communication.”Forward guidance…

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Janet Yellen admits the Fed could be confusing the public with its many voices

“We’ve had a kind of democratization of monetary policy that began really under my predecessor,” Yellen added” writes Silvia Amaro for cnbc.com. Federal Reserve Chair Janet Yellen said that one of the challenges for the central bank is the multiple members it has and how they communicate with the public.Yellen highlighted that individual speeches from committee members, mainly before a policy decision meeting, can be a hurdle for the Federal Reserve.The discussion panel — which also featured central bank chiefs from Japan, the U.K. and the euro zone — focused…

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Markets News Regulators 

The Fed could be tightening more than it realizes

“Our analysis suggests that it will be, in fact, considerably more important than the market, or the Fed itself, realizes” writes Benn Steil for businessinsider.com. All else being equal, this represents a tightening of monetary policy, as it tends to push up longer-term (10-year) market interest rates.Yellen acknowledges that reducing the balance sheet now is, logically, a substitute for raising the Fed’s policy rate.The Fed’s main tool for tightening monetary policy in a recovering economy would, therefore, she explained, be raising short-term market interest rates by paying banks greater interest…

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News 

These are now the 5 most fragile countries exposed to higher interest rates, according to S&P

“Credit ratings agency S&P Global has reshuffled its list of the countries that are most negatively affected in an environment of rising interest rates” writes Silvia Amaro for cnbc.com. Tighter monetary policy poses risks for emerging economies in a variety of ways.Another is that raising rates means that American investors pour their money back into their home country in anticipation of higher yields.The U.S. Federal Reserve has begun raising interest rates and the Bank of England took the same step last week, for the first time since 2007. Source: cnbc.com Share…

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New York Fed president to retire

“Federal Reserve Bank of New York President William Dudley will retire next year, the central bank announced Monday, opening another key position within a Fed system that is already slated for rapid change under President Trump” writes Joseph Lawler for washingtonexaminer.com. The New York Fed has special status within the Fed system because it carries out the central bank’s monetary decisions in the markets and oversees New York banks.Dudley became president of the New York Fed during the depths of the financial crisis in 2009, replacing Timothy Geithner when he…

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News Regulators 

Jerome Powell’s Fed would be an unknown quantity | Opinion

“On financial regulation, as opposed to monetary policy, the Powell Fed can be expected to adjust the emphasis, at least” writes Bloomberg View Editorial for sun-sentinel.com. At first sight, the appointment signals business as usual in monetary policy, rather than the unconventionality that some of the other candidates stood for.The Fed is gradually getting monetary policy back to normal, and a surge of uncertainty over its intentions on interest rates and balance-sheet operations wouldn’t help.That particular change of emphasis would be good: Making financial firms stronger is the best way…

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Trump picks party loyalist for Fed chairman to keep boom going 

“President Donald Trump has picked a malleable monetary dove with a taste for laxer banking rules to be the next chairman of the US Federal Reserve, raising the likelihood of an unchecked asset boom and possibly resurgent inflation over coming years” writes Jeremy Warner for telegraph.co.uk. In the short run Mr Powell’s appointment ensures that the current gentle pace of monetary tightening will continue as before,… Source: telegraph.co.uk Share This:

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Text of Powell’s statement on being named Fed chairman nominee

“Inside the Federal Reserve, we understand that monetary policy decisions matter for American families and communities” reports marketwatch.com. I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence, in the longstanding tradition of monetary policy independence. Source: marketwatch.com Share This:

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Trump nominates Jerome Powell to head U.S. Federal Reserve

“President Donald Trump on Thursday tapped Fed Governor Jerome Powell to become head of the U.S. central bank, promoting a soft-spoken centrist to replace Janet Yellen when her term expires in February 2018” reports foxbusiness.com. Under President George H.W. Bush, Powell oversaw policy on financial institutions and debt markets as an undersecretary of the Treasury.The decision, which ended an unusually public, months-long search, offers a bit of both worlds, allowing Trump to select a new Fed chief while getting continuity with a Yellen-run central bank that has kept the economy…

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