• Transcript: Fed Chief Jerome Powell Q&A With Alan Blinder Link
    WSJ Central Banks Fri 29 May 2020 21:24

    Federal Reserve Chairman Jerome Powell discussed the central bank’s independence, powers and actions in response to the economic shocks caused by the coronavirus pandemic during an online conversation Friday with Princeton University professor and former Fed Vice Chairman Alan S. Blinder. Here is a transcript, lightly edited for clarity and length.

    MR. BLINDER: Let me briefly introduce a man who needs no introduction, but we’re happy to welcome here today. Jay Powell graduated from Princeton, which is relevant today, 45 years...

  • ‘A full recovery of the economy will really depend on people being confident that it’s safe to go out,’ Fed Chairman Jerome Powell said Link
    WSJ Central Banks Fri 29 May 2020 19:54

    Federal Reserve Chairman Jerome Powell said he worries the economy could face a significantly longer and weaker recovery if the U.S. faced a second outbreak of the new coronavirus in the months ahead.

    “A full recovery of the economy will really depend on people being confident that it’s safe to go out,” he said Friday in an online discussion hosted by Princeton University. “A second wave would really undermine public confidence.”

    ...
  • Cleveland Fed leader Loretta Mester said a “second phase” of Fed action will help economy back to former strength Link
    WSJ Central Banks Fri 29 May 2020 15:23

    Federal Reserve Bank of Cleveland President Loretta Mester said Friday the recovery from the coronavirus crisis is likely to be slow, even if economic data that comes out later this year point to a dramatic rebound.

    “When you have so many people out of work, it’s hard to imagine that we’d see a quick V-shape recovery. I think it’s going to be slow,” Ms. Mester said on Bloomberg Television.

    Ms....

  • “We may have to live with this virus without a vaccine for some extended period of time,” says Dallas Fed leader Robert Kaplan Link
    WSJ Central Banks Fri 29 May 2020 15:18

    The U.S. will need a strong regime to test, trace and quarantine cases of the novel coronavirus to ensure a stronger rebound in employment and economic activity as states lift restrictions on commerce this summer, Dallas Fed President Robert Kaplan said in an interview.

    “You will need, at least pre-vaccine, procedures to give people confidence to engage in some of these activities in industries that employ millions of people,” said Mr. Kaplan, who spoke to the WSJ by phone on May 27. Here is a transcript of that conversation,...

  • The Federal Reserve’s June 9-10 policy meeting could lay groundwork for a forthcoming reset to support a virus-stricken economy Link
    WSJ Central Banks Fri 29 May 2020 13:28

    Federal Reserve officials head into their next policy meeting deliberating how to assist an economy in a deeper hole than it faced after the 2008 financial crisis at a time when their tools might have less zip.

    They are likely to debate how to adjust their plans to purchase Treasury and mortgage assets and how to make more concrete their assurances to keep interest rates near zero for some time.

    Officials...

  • Consumer Spending Fell a Record 13.6% in April Link
    WSJ Central Banks Fri 29 May 2020 13:28

    U.S. consumer spending fell by a record 13.6% in April during coronavirus lockdowns, but there are signs that purchasing is starting to pick up.

    The April decline was the steepest for records tracing back to 1959. Weak April spending adds to the evidence that the U.S. economy is in for a long, slow recovery. The coronavirus pandemic and related lockdowns wiped out a decade of job gains within a month.

    Personal...

  • The official said projections wouldn’t provide a “meaningful snapshot” of economy because of uncertainty caused by pandemic Link
    WSJ Central Banks Thu 28 May 2020 22:28

    WASHINGTON—The White House won’t issue updated economic projections this summer because of uncertainty caused by the coronavirus pandemic, according to a senior administration official.

    The official said the coronavirus has resulted in “fluctuating” economic data, and that White House projections wouldn’t provide a “meaningful snapshot” of the economy. The Washington Post first reported the decision.

    For...

  • Quick Hits: Bank of England Official Says It’s ‘Safer to Err on the Side of Easing’ Link
    WSJ Central Banks Thu 28 May 2020 21:18

    Bank of England policy maker Michael Saunders said the “searing experience” of the new coronavirus is likely to cause lasting damage to the economy, and the Polish central bank cut its benchmark interest rate. Here is a roundup of central banking news and analysis from around the world.

    BOE’s Saunders: ‘Safer to Err on the Side of Easing’

    Bank of England policy maker Michael Saunders said it was better to risk expanding stimulus by too much than by too little due to the impact coronavirus pandemic will have on the economy....

  • Fed’s Harker Says Pandemic Has Highlighted Economic Inequality Link
    WSJ Central Banks Thu 28 May 2020 19:53

    Federal Reserve Bank of Philadelphia President Patrick Harker said the coronavirus crisis has weighed mostly heavily on those least able to bear the costs and has highlighted inequality in the American economy.

    “As a health and an economic crisis, Covid-19 has the cruel effect of hurting those who were already most vulnerable,” Mr. Harker...

  • New York Fed chief John Williams said he expects inflation to run below where it’s been the past year or two, even with Fed moves to support the economy during the pandemic Link
    WSJ Central Banks Thu 28 May 2020 19:38

    Federal Reserve Bank of New York leader John Williams said he sees little risk of an inflation surge despite a wave of central bank support for the economy and financial system prompted by the coronavirus crisis.

    Mr. Williams said the Fed’s support actions, which have boosted its balance sheet to just over $7 trillion from $4.2 trillion in early March, are aimed at bridging the economy over the crisis and aren’t a form of outright stimulus.

    ...
  • U.S. Economy Contracted 5% in First Quarter, Slightly Steeper Than Initial Estimate Link
    WSJ Central Banks Thu 28 May 2020 16:53

    WASHINGTON—The U.S. economy’s first-quarter contraction was slightly steeper than initially estimated, and a key measure of corporate profits weakened as the coronavirus and related shutdowns began to have an effect.

    Gross domestic product—the value of all goods and services produced across the economy—fell at a 5.0% annual rate in the first quarter, adjusted for seasonality and inflation, the Commerce Department said Thursday.

    The...

  • Economies are returning to life, but at different paces around the world and with varying degrees of damage to their economies and societies Link
    WSJ Central Banks Thu 28 May 2020 12:32

    After the big freeze, the slow thaw.

    As countries lift lockdowns around the world, they are slowly returning to life—but at different paces in different places and with varying degrees of damage to their economies and societies.

    When public-health restrictions took hold, energy consumption fell, air pollution eased, mass transit use tumbled,...

  • Unemployment claims are expected to fall but still remain 10 times higher than normal Link
    WSJ Central Banks Thu 28 May 2020 11:47

    Applications for unemployment insurance are expected to have declined last week for the eighth straight decrease, but the number of workers seeking assistance remains about 10 times higher than before coronavirus-related lockdowns began in March.

    Many economists see the pace of layoffs slowing, with all states taking some steps to let businesses reopen and citizens to move more freely. But they also expect a labor-market recovery to take many months, if not years, to replace the tens of millions of jobs lost since February.

    ...
  • Derby’s Take: Bullard Says It’s Nearing Time to Cut Back Enhanced Jobless Benefits Link
    WSJ Central Banks Thu 28 May 2020 10:47

    St. Louis Fed leader James Bullard believes it’s getting close to time to nudge workers back into the coronavirus-ravaged job market.

    The veteran central banker told reporters Wednesday it was appropriate for the federal government to boost jobless benefits to help keep workers whole during the worst phase of the coronavirus crisis. The government enhanced jobless insurance benefits by giving claimants an extra $600 a week, but that is set to run out at the end of July.

    ...
  • Bank of Korea Cuts Rate to Record Low Link
    WSJ Central Banks Thu 28 May 2020 10:37

    South Korea’s central bank cut its base rate to a record low on Thursday, adding further stimulus as the coronavirus pandemic threatens to drag growth to its lowest in more than two decades.

    The Bank of Korea lowered its benchmark interest rate by 25 basis points to 0.50% after a surprise 50 basis point cut in mid-March.

    The pandemic has...

  • Denmark Works on Adding Green Element to Sovereign Bond Issuance Link
    WSJ Central Banks Wed 27 May 2020 23:47

    Denmark’s central bank and the Ministry of Finance are looking into the possibility of adding a green element to the Danish issuance program in a way that ensures a continued well-functioning and liquid market for Danish government bonds, the central bank said Wednesday.

    The central bank and the ministry will continue this work until a final political decision on a green issuance is made, the central bank said. An essential consideration is the liquidity of the government bond market, it added.

    ...
  • Federal Reserve Bank of New York President John Williams said the worst of the economy’s decline from the coronavirus crisis may be over Link
    WSJ Central Banks Wed 27 May 2020 22:46

    Federal Reserve Bank of New York President John Williams said on Bloomberg’s television channel Wednesday the worst of the economy’s decline from the coronavirus crisis may be over, even as he warned hard days still lie ahead in a climate of considerable uncertainty.

    “Based on what we are seeing now, I think we are pretty close, maybe May or June will be the low point right now based on the data we are seeing,” Mr. Williams told the television channel. “But let’s not forget this is an extreme decline in economic activity,...

  • Federal Reserve report on business conditions finds evidence of a continued labor-market slide, lower consumer spending Link
    WSJ Central Banks Wed 27 May 2020 21:41

    WASHINGTON—U.S. businesses saw limited evidence of a recovery in recent weeks, with economic activity continuing to decline amid the coronavirus pandemic, the Federal Reserve said Wednesday.

    The labor market continued to deteriorate and consumer spending fell further as retailers and restaurants remained largely closed in most of the country through mid-May, the Fed said in its periodic report of anecdotes from businesses around the country known as the “beige book.”

    ...
  • Eurozone Economy to Shrink 8% to 12% This Year, Lagarde Says Link
    WSJ Central Banks Wed 27 May 2020 20:41

    FRANKFURT—European Central Bank President Christine Lagarde warned that the eurozone economy will likely shrink by between 8% and 12% this year, a deeper downturn than previously anticipated, as governments battle the coronavirus pandemic.

    Ms. Lagarde’s comments are the latest signal that the ECB is preparing to increase its stimulus as soon as next week, in an effort to shore up plunging economic growth and inflation. Analysts expect the bank to vastly scale up a recently unveiled 750 billion-euro ($821.6 billion) bond-buying...

  • As coronavirus lockdown rules ease, employers are making plans to allow many of their staffers to continue working remotely when the crisis ends. Link
    WSJ Central Banks Wed 27 May 2020 14:46

    As states begin to lift the stay-at-home restrictions put in place to combat the coronavirus pandemic, some workers now say they are just fine working from home and would like to do so permanently.

    In response, employers are formulating plans to allow many of their staffers to keep working remotely when the crisis is over. Such a move would have significant implications for everything from rent to congestion to migration in urban work environments.

    ...
  • New Zealand’s Central Bank Says Pandemic to Test Resilience of Banks Link
    WSJ Central Banks Wed 27 May 2020 12:01

    WELLINGTON, New Zealand—The resilience of New Zealand’s banks will be tested by the coronavirus pandemic, but the overall financial system is in a solid position to weather the economic downturn, the central bank said Wednesday.

    Loan losses for banks will rise, but stress tests indicate they can maintain adequate capital even if the economic downturn is worse than current projections, the Reserve Bank of New Zealand said in its twice-a-year review of financial stability.

    ...
  • Derby’s Take: New Data Suggests the Economy May Have Seen the Worst of It Link
    WSJ Central Banks Wed 27 May 2020 10:51

    Data released Tuesday provided glimmers of hope that the U.S. economy may no longer be in free fall as the coronavirus crisis continues to rage.

    Factory and confidence data had something positive to say about the economy’s outlook, even as the numbers underscored the pain caused by much of the private sector remaining shut to reduce the spread of the coronavirus.

    Referring...

  • Providers of security guards, senior care, online-banking services and landscaping are among the employers that maintained or expanded hiring recently Link
    WSJ Central Banks Tue 26 May 2020 19:40

    Pockets of hiring have emerged beyond online retailing and grocery delivery, even amid the coronavirus-induced surge in job cuts, as employers adapt to new working practices and changing consumer behavior.

    Providers of security guards, senior care, online-banking services and landscaping are among the employers that maintained or even expanded hiring in recent weeks, joining industries such as defense that have continued working normally through the pandemic, according to the Labor Department and company reports.

    ...
  • White House economic advisor points to businesses reopening and credit-card data showing consumers are starting to increase spending as signs the economy is beginning to improve. Link
    WSJ Central Banks Tue 26 May 2020 18:35

    WASHINGTON—The first shoots of an economic recovery from shutdowns caused by the coronavirus pandemic are starting to emerge, but the U.S. is likely to face a sustained period of record-high unemployment.

    Policy makers confronting that possibility are preparing plans to offer additional stimulus to the economy in the coming weeks and months.

    White...

  • Transcript: New York Fed President John Williams Talks of Outlook for New York Economy Link
    WSJ Central Banks Tue 26 May 2020 17:30

    Federal Reserve Bank of New York leader John Williams spoke by video last Thursday to groups representing interests in the northern part of New York state. In an expansive question-and-answer session with Dottie Gallagher, president and chief executive of the Buffalo Niagara Partnership, Mr. Williams described the Fed’s aggressive response to the coronavirus pandemic, his doubts about using negative interest rates as a tool, his lack of concern over the near-term implications of higher government debt, and how the central bank has to be prepared for unexpected events. Here is a transcript, lightly edited for clarity and...

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