• A top U.S. banking regulator said he doesn’t see time to compromise with the Fed regarding a proposal that would update federal regulations under the Community Reinvestment Act Link
    WSJ Central Banks Wed 22 Jan 2020 20:30

    WASHINGTON—A top U.S. banking regulator said Wednesday he plans to push ahead with a proposal to overhaul rules governing billions of dollars of lending in low-income neighborhoods despite objections from the Federal Reserve.

    Comptroller of the Currency Joseph Otting said he doesn’t see time to compromise with the Fed regarding a December proposal that would update federal regulations under the Community Reinvestment Act. The proposal was crafted jointly by his office and the Federal Deposit Insurance Corp.

    ...
  • The central bank intervenes in the short-term money markets to maintain liquidity Link
    WSJ Central Banks Wed 22 Jan 2020 16:05

    The Federal Reserve Bank of New York implemented a $49.8 billion short-term liquidity operation on Wednesday.

    The Fed intervened in money markets with an overnight repurchase agreement, or repo, operation that took in $31.5 billion in Treasurys, $1.5 billion in agencies and $16.9 billion in mortgages.

    Eligible banks—called primary dealers—took...

  • The Bank of Canada left its key interest rate unchanged at 1.75% and marked down its estimates for near-term growth, opening the door for a future rate cut Link
    WSJ Central Banks Wed 22 Jan 2020 15:25

    OTTAWA—The Bank of Canada left its key interest rate unchanged at 1.75% on Wednesday and marked down its estimates for near-term growth, opening the door for a future rate cut if the domestic outlook worsens.

    In a statement that accompanied the rate decision, the central bank said growth would be slower than previously anticipated after exports,...

  • Video: How Global Trade Runs on U.S. Dollars Link
    WSJ Central Banks Wed 22 Jan 2020 15:25
    Nearly 90% of international transactions in 2019 were in U.S. dollars, giving the U.S. extraordinary power over nearly every entity that imports or exports anything anywhere. Here’s how the global economy runs on the U.S. dollar -- and why some countries are trying to chip away at its dominance.
  • Derby’s Take: Central Banks Need to Take Action on Climate Change, Report Says Link
    WSJ Central Banks Wed 22 Jan 2020 12:54

    An organization comprised of the world’s top central banks says they have a key role to play in mitigating the risk posed by a changing global environment.

    The Bank for International Settlements, which counts the Federal Reserve, European Central Bank and other institutions as members, warned of what it called “green swan” environmental shocks, which it defined as “potentially extremely financially disruptive events that could be behind the next systemic financial crisis.”

    ...
  • Bank Negara Malaysia Cuts Policy Rate in Surprise Move Link
    WSJ Central Banks Wed 22 Jan 2020 11:54

    Malaysia’s central bank on Wednesday cut its benchmark interest rate by a quarter of a percentage point to 2.75% in a surprise move, to lend support to economic growth.

    Four out of five economists polled by The Wall Street Journal had expected Bank Negara Malaysia to maintain its overnight policy rate at 3.00%.

    The rate is the lowest since...

  • Good news for 2020: The risks of a recession have receded. The bad news is that if fears flare again, policy makers will be hard-pressed to respond. Link
    WSJ Central Banks Tue 21 Jan 2020 15:49
  • Fed intervention comes as an overnight repo totaling $58.6 billion and a 14-day repo totaling $32.2 billion. Link
    WSJ Central Banks Tue 21 Jan 2020 15:24

    The Federal Reserve added $90.8 billion in short-term money to financial markets Tuesday.

    The Fed added money in two repurchase-agreement operations, or repos. The overnight intervention added $58.6 billion, while a 14-day repo added $32.2 billion. In both cases, eligible banks—called primary dealers—took less money than the Fed was willing to offer.

    Fed...

  • Philadelphia Fed president says the U.S. economy is in good shape right now, adding that how the data come in will drive what central bank officials do with interest-rate policy Link
    WSJ Central Banks Fri 17 Jan 2020 14:29

    The president of the Philadelphia Federal Reserve Bank, Patrick Harker, said the U.S. economy is in good shape right now, adding that how economic data come in will drive what central bank officials do with interest-rate policy.

    “My outlook for the economy is positive, but let me add that my outlook will continue to be driven by the data as each report is released throughout 2020,” Mr. Harker said in a speech prepared for delivery before a banking group in New Jersey. He added, “The data will also determine my view on monetary...

  • The White House said it would soon nominate economists Judy Shelton and Christopher Waller to fill two Federal Reserve Board vacancies. Link
    WSJ Central Banks Fri 17 Jan 2020 12:29

    WASHINGTON—The White House said it would soon nominate economists Judy Shelton and Christopher Waller to fill two Federal Reserve Board vacancies after months of President Trump criticizing the central bank for not doing more to stimulate the U.S. economy.

    Mr. Trump announced the picks on Twitter last July. The White House signaled it had finished months of background checks Thursday by affirming Mr. Trump’s plans to formally submit the nominations to the Senate for confirmation.

    ...
  • Chinese purchases of U.S. goods face a steep climb if they are to meet the goals set out in the two countries’ trade deal Link
    WSJ Central Banks Fri 17 Jan 2020 10:24

    WASHINGTON—Call it the Big Buy.

    The U.S.-China trade deal lays out an aggressive schedule for ramping up China’s purchases of American farm products, manufactured goods, business services and oil and natural gas to levels never seen before—an increase of $200 billion over two years.

    Can China absorb that much from the U.S., and if so can the...

  • Some ECB rate-setters expressed concern about the side-effects of negative rates at new leader Christine Lagarde’s first policy meeting Link
    WSJ Central Banks Fri 17 Jan 2020 08:24

    FRANKFURT—Some European Central Bank officials warned at their latest policy meeting about the possible adverse side effects of negative interest rates, according to minutes of the meeting, raising questions about the future of a key policy tool.

    The ECB is among a handful of central banks to have pushed a key interest rate below zero in recent years to give their economies an extra kick. But some economists worry that the tool could create distortions in financial markets and the economy.

    ...
  • The U.S. economy is entering 2020 on solid footing, the Fed says Link
    WSJ Central Banks Fri 17 Jan 2020 06:24

    WASHINGTON—The U.S. economy is entering 2020 on solid footing, having kept up its modest expansion in the final six weeks of 2019, the Federal Reserve said Wednesday.

    Tight labor markets, slow price increases and a solid holiday season—particularly among online shoppers—offset weakness in manufacturing, the central bank said in its periodic report of anecdotes from businesses around the country known as the “beige book.”

    Trade...

  • Retail Sales Rose 0.3% in December Link
    WSJ Central Banks Fri 17 Jan 2020 04:19

    WASHINGTON—Consumers headed into 2020 on a solid footing, driving up retail sales in the final month of the holiday season.

    December retail sales, a measure of purchases at stores, restaurants and online, increased a seasonally adjusted 0.3% from a month earlier, the Commerce Department said Thursday.

    Solid gains in nearly every category...

  • The Dallas Fed leader would like to find a way soon to pare back the expansion of the Fed’s balance sheet Link
    WSJ Central Banks Fri 17 Jan 2020 02:19

    Federal Reserve Bank of Dallas leader Robert Kaplan said Wednesday central bank actions, most notably its injections of liquidity into financial markets, are boosting investors’ risk taking, adding he would like to find a way soon to pare back the expansion of the Fed’s balance sheet.

    “Many market participants believe that growth in the Fed balance sheet is supportive of higher valuations and risk assets,” Mr. Kaplan told reporters after an appearance at the Economic Club of New York. When it comes to worries Fed actions are...

  • The rate-cut was prompted by a deteriorating outlook for Africa’s most developed economy Link
    WSJ Central Banks Fri 17 Jan 2020 00:14

    JOHANNESBURG—South Africa’s Reserve Bank cut interest rates to 6.25% on Thursday, a surprise move spurred by lower-than-expected inflation expectations that come amid a deteriorating outlook for Africa’s most developed economy.

    The monetary policy committee’s decision to reduce the repo rate by 25 basis points surprised analysts who had forecast the bank to keep a neutral stance for the seventh straight month. South Africa’s rate setters have broadly kept policy in line with the U.S. Federal Reserve and European Central Bank,...

  • What Happens When Central Banks Accept Riskier Collateral? Link
    WSJ Central Banks Thu 16 Jan 2020 22:14

    After the global financial crisis, the Bank of England began accepting riskier assets such as loan portfolios in its liquidity operations. In an article for the BOE’s Bank Underground blog, Calebe de Roure of the Reserve Bank of Australia and the Bank of England’s Nick McLaren examine whether that has led to an increase in risk by incentivizing banks to use riskier assets as collateral, or by encouraging riskier banks to participate in liquidity operations.

    The short answer: No. The BOE conducted liquidity operations after...

  • Turkey’s central bank extended its easing cycle in line with President Recep Tayyip Erdogan’s attempt to stimulate growth Link
    WSJ Central Banks Thu 16 Jan 2020 21:04

    Turkey’s central bank cut its benchmark rate for the fifth time in six months, as its new governor continued to ease policy in line with President Recep Tayyip Erdogan’s attempt to stimulate economic growth.

    The central bank on Thursday cut its key rate to 11.25% from 12%, extending an easing cycle it started in July last year. Ten analysts had expected a rate cut of between 25 and 150 basis points, while two had forecast no change, according to a survey by The Wall Street Journal.

    ...
  • Capital Account: Climate change’s economic impact is no longer distant and imperceptible Link
    WSJ Central Banks Thu 16 Jan 2020 19:59

    Last year Australia’s central bank hoped that several interest-rate cuts would mark a turning point for its slowing economy. That was before the worst bushfires in Australia’s history hit tourism, consumer confidence and growth forecasts for this year. There is now a good chance the bank will cut interest rates again soon.

    Welcome to a world in which climate change’s economic impact is no longer distant and imperceptible. Puerto Rico never fully recovered from Hurricane Maria in 2017. Extreme drought in California and poorly...

  • Federal Reserve Bank of Philadelphia leader Patrick Harker said Wednesday that while he was very skeptical of last year’s central bank rate cuts, he believes monetary policy is now in a “good place.” Link
    WSJ Central Banks Thu 16 Jan 2020 18:54

    NEW YORK—Federal Reserve Bank of Philadelphia leader Patrick Harker said Wednesday that while he was very skeptical of last year’s central bank rate cuts, he believes monetary policy is now in a “good place.”

    “I don’t think we need to move rates in either direction” in an economy that’s generally doing well, despite considerable uncertainty about the outlook, Mr. Harker said while speaking at the Official Monetary and Financial Institutions Forum in New York.

    ...
  • Workers, companies and investors best prepare for a world where the Fed and other central banks can't protect them from the next recession. Link by @greg_ip
    WSJ Central Banks Thu 16 Jan 2020 17:48

    The Federal Reserve and other central banks have long been the unchallenged drivers of financial markets and the business cycle. “Don’t fight the Fed,” goes one Wall Street adage.

    That era is drawing to a close. In many countries, interest rates are so low, even negative, that central banks can’t lower them further. Tepid economic growth and low inflation mean they can’t raise rates, either.

    Since...

  • The Federal Reserve and other central banks have long been the drivers of financial markets. That era is drawing to a close, leaving the world more vulnerable. Link
    WSJ Central Banks Thu 16 Jan 2020 16:43

    The Federal Reserve and other central banks have long been the unchallenged drivers of financial markets and the business cycle. “Don’t fight the Fed,” goes one Wall Street adage.

    That era is drawing to a close. In many countries, interest rates are so low, even negative, that central banks can’t lower them further. Tepid economic growth and low inflation mean they can’t raise rates, either.

    Since...

  • The U.S. Senate is expected to pass an overhaul of North America’s trade rules today and send a major Trump administration priority to the president’s desk. Link
    WSJ Central Banks Thu 16 Jan 2020 15:38

    The U.S. Senate is expected to pass an overhaul of North America’s trade rules on Thursday and send a major Trump administration priority to the president’s desk.

    The U.S.-Mexico-Canada Agreement would replace the 26-year-old North American Free Trade Agreement. The pact updates trading rules in the continent to address 21st-century technology, safeguard environmental and labor standards in Mexico and toughen requirements for auto-industry trade among the three countries.

    ...
  • “We are one recession away from joining Europe and Japan in the monetary black hole.” How low interest rates and slow growth could trap the U.S. economy. Link
    WSJ Central Banks Thu 16 Jan 2020 15:03

    The Federal Reserve and other central banks have long been the unchallenged drivers of financial markets and the business cycle. “Don’t fight the Fed,” goes one Wall Street adage.

    That era is drawing to a close. In many countries, interest rates are so low, even negative, that central banks can’t lower them further. Tepid economic growth and low inflation mean they can’t raise rates, either.

    Since...

  • Welcome to a world in which climate change’s economic impact is no longer distant and imperceptible. Link
    WSJ Central Banks Thu 16 Jan 2020 14:48

    Last year Australia’s central bank hoped that several interest-rate cuts would mark a turning point for its slowing economy. That was before the worst bushfires in Australia’s history hit tourism, consumer confidence and growth forecasts for this year. There is now a good chance the bank will cut interest rates again soon.

    Welcome to a world in which climate change’s economic impact is no longer distant and imperceptible. Puerto Rico never fully recovered from Hurricane Maria in 2017. Extreme drought in California and poorly...

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