• Chicago Fed leader Charles Evans kept the door open to an October rate cut, which would be the third this year, in remarks Wednesday Link
    WSJ Central Banks Wed 16 Oct 2019 15:15

    Chicago Fed leader Charles Evans kept the door open to an October rate cut in remarks Wednesday, but didn’t indicate he was willing to walk through it yet.

    The veteran central banker and member of the rate-setting Federal Open Market Committee said his outlook was in line with the central bank’s official forecasts that held for no further change in rates this year. “I think policy probably is in a good place right now...the growth outlook is good, and we have policy accommodation in place to support rising inflation,” he said.

    But the official noted that he hasn’t yet fully made up his mind in a time of greater uncertainty about the outlook. Mr. Evans’ comments came from the text of speech to be presented in Peoria, Ill.

  • American shoppers pulled back on spending in September, signaling a key support for the U.S. economy this year could be softening amid a broader global economic slowdown. Link
    WSJ Central Banks Wed 16 Oct 2019 13:35

    WASHINGTON—American shoppers pulled back on spending in September, signaling a key support for the U.S. economy this year could be softening amid a broader global economic slowdown.

    Retail sales, a measure of purchases at stores, at restaurants and online, decreased a seasonally adjusted 0.3% in September from a month earlier, the first monthly decline since February, the Commerce Department said Wednesday. Excluding autos, retail sales were down 0.1% in September.

    ...
  • The U.S. might have benefited from using negative interest rates during the financial crisis, a new report from the San Francisco Fed said Tuesday. Link
    WSJ Central Banks Tue 15 Oct 2019 17:54

    Negative interest rates are a viable tool to provide stimulus to economies that need it, and the U.S. might have benefited from using it during the financial crisis, a new report from the San Francisco Fed said Tuesday.

    “Analyzing financial market reactions to the introduction of negative interest rates shows that the entire yield curve for government bonds in those economies tends to shift lower,” writes bank economist Jens Christensen. “This suggests that negative rates may be an effective monetary policy tool to help ease...

  • The Federal Reserve Bank of New York said Tuesday that longer-run inflation expectations hit the lowest level the bank has ever tracked Link
    WSJ Central Banks Tue 15 Oct 2019 15:29

    The Federal Reserve Bank of New York said Tuesday that longer-run inflation expectations hit the lowest level the bank has ever tracked in its latest monthly Survey of Consumer Expectations.

    The central bank said that in September, the public’s expectation of inflation three years from now fell to 2.4% from 2.5% the prior month. That is the lowest reading since the start of the survey in 2013. Shorter-run inflation expectations fared a touch better, however, with the public’s expectation of inflation a year from now moving...

  • The Federal Reserve Bank of New York added $87.7 billion to the financial system Tuesday, using the market for repurchase agreements, or repo, to relieve funding pressure in money markets Link
    WSJ Central Banks Tue 15 Oct 2019 13:24

    The Federal Reserve Bank of New York added $87.7 billion to the financial system Tuesday, using the market for repurchase agreements, or repo, to relieve funding pressure in money markets.

    Banks asked for $67.6 billion in overnight reserves, all of which the Fed accepted, offering collateral in the form of Treasury and mortgage securities.

    In...

  • St. Louis Fed President James Bullard said a key risk the economy faces is that overall activity might slow more than most now expect Link
    WSJ Central Banks Tue 15 Oct 2019 11:34

    Federal Reserve Bank of St. Louis President James Bullard said one of the biggest risks the economy faces is that overall activity may slow more than most now expect.

    The official, who is a voting member of the rate-setting Federal Open Market Committee and one of its strongest supporters of lowering rates this year, didn’t say it was time to lower short-term borrowing costs again. His comments came from a presentation prepared for delivery in London.

    ...
  • Nobel Prize in economics awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer “for their experimental approach to alleviating poverty” Link
    WSJ Central Banks Mon 14 Oct 2019 13:23

    The Nobel Prize in economics was awarded Monday to a trio of U.S.-based economists—including a married couple—for their “experimental approach to alleviating global poverty.”

    Abhijit Banerjee, Esther Duflo and Michael Kremer played a key role in transforming the approach to lessening global poverty, the Nobel committee said.

    Starting in...

  • Dallas Fed President Robert Kaplan says it is too soon to say what would happen at the rate-setting Federal Open Market Committee meeting this month Link
    WSJ Central Banks Fri 11 Oct 2019 01:14

    Dallas Fed President Robert Kaplan said Thursday the central bank’s two rate cuts thus far this year were the right thing to do, but he’s reserving judgment about what should happen next.

    “I am concerned that if non-U.S. growth continues to decelerate, and weakness in U.S. manufacturing and business investment intensifies, this weakness could spread to the broader U.S. economy, ultimately impacting consumer confidence and spending,” Mr. Kaplan wrote in an essay affirming his support of both rate cuts.

    ...
  • Excluding the volatile food and energy categories, so-called core prices rose 0.1%, moderating from a 0.3% increase in August. Link
    WSJ Central Banks Thu 10 Oct 2019 23:14

    WASHINGTON—A key reading on U.S. inflation cooled slightly at the end of the summer.

    U.S. consumer prices were flat in September, as a decline in energy and used-vehicle prices held down broader inflationary pressures, after rising a seasonally adjusted 0.1% in August, the Labor Department said Thursday.

    Excluding the volatile food and energy...

  • Employer demand for workers softened this summer, as job openings fell from a year earlier for the third consecutive month in August Link
    WSJ Central Banks Thu 10 Oct 2019 21:14

    WASHINGTON—Employer demand for workers softened this summer, as job openings fell from a year earlier for the third consecutive month in August.

    The number of openings declined 4% in August from a year earlier to 7.1 million, after posting annual declines in June and July, Labor Department data released Wednesday showed. Openings last logged three straight months of year-over-year declines in 2009.

    Continued...

  • Fed Officials Last Month Worried Trade War Could Hurt Hiring, Consumer Spending Link
    WSJ Central Banks Thu 10 Oct 2019 19:09

    WASHINGTON—Federal Reserve officials grew more worried when they cut interest rates last month that slowing global growth, exacerbated by the U.S.-China trade war, could sap domestic hiring and economic activity.

    Since last month’s Fed meeting, surveys and other economic data have hinted that weakness in the hard-hit manufacturing might be spreading into other parts of the U.S. economy, such as the services sector. Officials in recent days haven’t dispelled market expectations that they would cut interest rates when they meet...

  • At least seven senior ECB officials opposed the stimulus package announced last month, minutes show Link
    WSJ Central Banks Thu 10 Oct 2019 17:09

    Top European Central Bank officials were divided over a move last month to restart the bank’s €2.6 trillion bond-buying program, according to minutes of the meeting, underscoring the challenge facing incoming President Christine Lagarde to heal fractures over how to support the region’s faltering economy.

    The ECB last month unveiled a sweeping package of stimulus measures, including a €20 billion a month bond-buying program.

    “A...

  • Transcript: Q&A With Fed Chairman Jerome Powell in Denver Link
    WSJ Central Banks Thu 10 Oct 2019 16:04

    Federal Reserve Chairman Jerome Powell discussed how he monitors the economy, bank reserves and the Fed’s balance sheet, why the central bank is committed to its 2% inflation target, and the Fed’s review of how it conducts monetary policy during a question-and-answer session Tuesday, Oct. 8. Lisa Emsbo-Mattingly, director of research for global asset allocation at Fidelity Investments, served as moderator at the National Association for Business Economics event in Denver. Here is a transcript, lightly edited for clarity and length.

    LISA...

  • Top ECB officials squabbled over the bank’s monetary stimulus package, underscoring the challenge facing incoming President Christine Lagarde Link
    WSJ Central Banks Thu 10 Oct 2019 14:49

    Top European Central Bank officials squabbled over key elements of the bank’s latest monetary stimulus package, according to minutes of its latest policy meeting, underscoring the challenge facing incoming President Christine Lagarde in mending a rift that could threaten the eurozone’s faltering economic recovery.

    The ECB last month rolled out a sweeping set of stimulus measures that included interest-rate cuts and an open-ended €20 billion-a-month ($21.9 billion) bond-buying program. The move is aimed at stabilizing the region’s...

  • Banks asked for $45.5 billion in overnight reserves and $42.6 billion in 14-day loans, all of which was accepted by the Fed Link
    WSJ Central Banks Thu 10 Oct 2019 13:44

    The Federal Reserve Bank of New York added $88.1 billion to the financial system Thursday, using the market for repurchase agreements, or repo, to relieve funding pressure in money markets.

    Banks asked for $45.5 billion in overnight reserves, all of which the Fed accepted, offering collateral in the form of Treasury and mortgage securities.

  • Dallas Fed President Robert Kaplan says it is too soon to say what would happen at the rate-setting Federal Open Market Committee meeting this month Link
    WSJ Central Banks Thu 10 Oct 2019 12:04

    Dallas Fed President Robert Kaplan said Thursday the central bank’s two rate cuts thus far this year were the right thing to do, but he’s reserving judgment about what should happen next.

    “I am concerned that if non-U.S. growth continues to decelerate, and weakness in U.S. manufacturing and business investment intensifies, this weakness could spread to the broader U.S. economy, ultimately impacting consumer confidence and spending,” Mr. Kaplan wrote in an essay affirming his support of both rate cuts.

    But as the Fed approaches the rate-setting Federal Open Market Committee meeting scheduled for Oct. 29-30, it is too soon to say what should happen next, Mr. Kaplan said.

  • Minutes of the Fed’s September meeting will reveal officials’ real-time assessment of last month’s money market volatility along with clues about a possible October rate cut Link
    WSJ Central Banks Wed 09 Oct 2019 22:23

    The Federal Reserve will provide new clues about its thinking on where to set interest rates when it releases the minutes of its Sept. 17-18 meeting on Wednesday at 2 p.m. EDT.

    Officials reduced rates by a quarter percentage point and left the door open to more cuts. The meeting also began amid a breakdown in money-market functioning that sent the central bank’s benchmark short-term rate rising above its target range. The minutes will show how officials evaluated that situation at the time. Here is what to watch:

    Policy Positioning

  • The Fed will soon announce plans to buy more short-term Treasurys over time in a bid to smooth funding hiccups, not stimulate the economy Link
    WSJ Central Banks Wed 09 Oct 2019 20:18

    DENVER—The Federal Reserve will soon increase its purchases of short-term Treasury securities to avoid a recurrence of the unexpected strains experienced in money markets last month, Fed Chairman Jerome Powell said Tuesday.

    Fed officials stopped shrinking the assets on their balance sheet in August but never said when they would allow the balance sheet to grow again. As a result, a crucial liability on the balance sheet—bank deposits held at the Fed, called reserves—has continued declining.

    ...
  • Central bank staff saw ‘persistent drag’ from tariffs likely to weigh on manufacturing, according to minutes of Sept. 17-18 policy meeting Link
    WSJ Central Banks Wed 09 Oct 2019 18:18

    Between officials’ meeting in late July and in mid-September, “a clearer picture of protracted weakness in investment spending, manufacturing production and exports had emerged,” said minutes of the Sept. 17-18 policy meeting, which were released on Wednesday.

    Officials expressed worry that weakness in business investment, trade and manufacturing could eventually erode consumer spending, which has been the main engine of growth for the U.S. economy in recent years. Some officials also pointed to models that in recent months indicated a rising likelihood of recession over the medium term.

    “One risk that the economy faced was that the softness recorded of late in firms’ capital formation, manufacturing and exporting activities might spread to their hiring decisions, with adverse implications for household income and spending,” the minutes said.

    Fed officials voted at that meeting to cut interest rates by a quarter percentage point to their current range...

  • Derby’s Take: Fed’s Policy Review May Not Lead to Big Changes Link
    WSJ Central Banks Wed 09 Oct 2019 17:23

    The Federal Reserve has spent considerable time this year on a campaign to hear what the public thinks about the economy and the central bank’s activities.

    These “Fed Listens” events—the latest happened Friday in Washington, while the next happens in Kansas City on Wednesday—are part of a process to take stock of where monetary policy and its tools stand. But it increasingly looks like as this process presses forward, big changes in the central bank’s regime are unlikely.

    ...
  • IMF and World Bank’s new leaders warn in twin speeches of a deteriorating global economic outlook, a week before they will lead the annual meetings of their institutions for the first time Link
    WSJ Central Banks Wed 09 Oct 2019 15:33

    The new leaders of the International Monetary Fund and World Bank warned in twin speeches of a deteriorating global economic outlook, just a week before they will lead the annual meetings of their institutions for the first time.

    “The global economy is now in a synchronized slowdown,” said Kristalina Georgieva of Bulgaria, the former No. 2 official at the World Bank, who took the helm of the IMF a week ago.

    Her...

  • Mexico’s inflation eased in September, coming in line with the Bank of Mexico’s 3% target for the first time in three years Link
    WSJ Central Banks Wed 09 Oct 2019 11:43

    MEXICO CITY—Mexico’s inflation eased in September, coming in line with the Bank of Mexico’s 3% target for the first time in three years and supporting expectations that the central bank will keep lowering interest rates amid a sluggish economy.

    The consumer price index rose 0.26% last month from the end of August and was up 3.00% from a year earlier, the National Statistics Institute said Wednesday. It was the lowest 12-month rate since September 2016.

    ...
  • Minutes of the Fed’s September meeting will reveal officials’ real-time assessment of last month’s money market volatility along with clues about a possible October rate cut Link
    WSJ Central Banks Wed 09 Oct 2019 11:18

    The Federal Reserve will provide new clues about its thinking on where to set interest rates when it releases the minutes of its Sept. 17-18 meeting on Wednesday at 2 p.m. EDT.

    Officials reduced rates by a quarter percentage point and left the door open to more cuts. The meeting also began amid a breakdown in money-market functioning that sent the central bank’s benchmark short-term rate rising above its target range. The minutes will show how officials evaluated that situation at the time. Here is what to watch:

    ...
  • A recent rise in Minnesota’s unemployment rate is raising the possibility that the state’s robust labor market may be faltering Link
    WSJ Central Banks Wed 09 Oct 2019 02:22

    A recent uptick in Minnesota’s unemployment rate is raising the possibility that the state’s robust labor market may be faltering, and local business leaders are stumped about what comes next.

    The state’s unemployment rate was 3.3% in August, a half percentage point higher than a year earlier. While employers in the state are still struggling to find employees amid a period of low unemployment both in Minnesota and across the country, many are trying to decipher the health of the economy and how it will affect their businesses.

    ...
  • The U.S. trade gap widened in August Link
    WSJ Central Banks Wed 09 Oct 2019 00:17

    WASHINGTON—The U.S. trade gap widened in August as American consumers bought more cellphones and other goods from abroad while businesses exported more oil and autos, a sign of the economy’s resilience amid a global economic slowdown.

    The trade deficit in goods and services increased 1.6% from a month earlier to a seasonally adjusted $54.9 billion in August, the Commerce Department said Friday.

    The...

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