Federal Reserve

  • 2019-05-21 12:10

    By Jean Yung

    WASHINGTON (MNI) - Federal Reserve Bank of Boston President Eric Rosengren said Tuesday that uncertainty over U.S.-China trade relations in light of otherwise healthy growth and a temporary decline in inflation calls for the Fed to be patient in raising or lowering short-term interest rates.

    "I see no clarion call to alter current policy in the near term. I view current policy as slightly accommodative and likely to be consistent with inflation returning to the Fed's 2% inflation target over time. This is likely to occur more rapidly if tariffs are imposed," he said in remarks prepared for The Economic Club of New York.

  • 2019-05-21 12:03

    By Jean Yung

    WASHINGTON (MNI) - Recent weakness in U.S. inflation was likely exaggerated by one-off price moves in isolated categories, and low rates of increases in health care prices will continue to restrain overall levels, Federal Reserve economists said in interviews over the past week.

    While President Donald Trump's latest tariff hikes on Chinese imports could result in a modest boost to inflation, the effects are difficult to pinpoint and would be viewed as transitory, they said.

    Cyclical components of the Fed's favored personal consumption expenditures inflation gauge have stayed high, in line with a healthy economy and tight labor market, said San Francisco Fed economist Adam Shapiro.

  • 2019-05-16 12:15

    By Jean Yung

    WASHINGTON (MNI) - The Federal Reserve should move cautiously in adjusting policy, given low neutral interest rates and inflation below target, Fed Governor Lael Brainard said Thursday.

    She again called for the central bank to guard against financial imbalances through the active use of countercyclical tools such as the countercyclical capital buffer.

  • 2019-05-16 08:07

    By Jean Yung

    WASHINGTON (MNI) - A standing repo facility allowing banks to swap safe assets for reserves on demand could be priced at a rate equal to the top of the Federal Reserve's target range, St. Louis Fed economist David Andolfatto said in an interview.

    This pricing would enable such a facility - now under consideration by the FOMC -- to function as a ceiling on short-term money market rates, while remaining low enough to attract usage in the event of a stress scenario, Andolfatto, who has written in favor of the idea, told MNI.

    Overnight repo rates have mostly posted below the Fed's current upper bound of 2.50% in 2019, but occasional spikes have contributed to "optics that the Fed does not have full control over the policy rate," he said.

  • 2019-05-14 13:20

    By Jean Yung

    WASHINGTON (MNI) - The Federal Reserve's patient approach to adjusting monetary policy remains appropriate despite persistently below-target inflation, given the context of a growing economy and tight labor markets, Kansas City Fed President Esther George said Tuesday.

    "This wait-and-see approach is appropriate because we have not seen upward pressures building on inflation, even though we have experienced above trend growth and a further tightening of labor markets," she said in remarks prepared for the Economic Club of Minnesota.

    "With the current outlook for the economy remaining positive, monetary policy settings look appropriate to me," she said.

    The current "benign inflation outlook" gives policymakers an opportunity to test the degree of slack i

  • 2019-05-10 10:00

    By Jean Yung

    WASHINGTON (MNI) - Federal Reserve Bank of New York President John Williams said Friday he still believes monetary policy is "in the right place" due to the lack of growing inflationary pressures, even as a number of near term risks have abated.

    The U.S. economy saw a surge in growth at the start of the year and the unemployment rate sank to a near 50-year low. Yet, "recent price data reaffirm that inflationary pressures remain muted," he said.

    The recent downward movement in core inflation "appears mostly to reflect normal volatility in inflation statistics," Williams said, adding that he prefers to look at the Dallas Fed's trimmed mean inflation measure, which is running at 2% and hasn't shown any sign of trending up or down.

  • 2019-05-10 10:00

    By Jean Yung

    WASHINGTON (MNI) - Economic forecasters' outlook for U.S. inflation and growth has weakened over the last quarter, according to the latest version of the Philadelphia Federal Reserve Bank's quarterly Survey of Professional Forecasters published Friday.

    The 40 economists surveyed now predict core PCE inflation to be 1.7% this year, down 0.3 percentage point from the previous estimate, and core CPI to be 2.1%, down 0.2 percentage point. However, over the next 10 years, forecasters expect headline PCE inflation to average 2% annual rate and headline CPI to average 2.2%, unchanged from the previous estimate.

    Inflation in the U.S. consistently fallen short of the Fed's 2% target, with core PCE inflation slowing to 1.6% in March from 2.0% in December.

  • 2019-05-08 09:58

    --Repeating Story Initially Sent At 7:01 AM ET Wednesday

    WASHINGTON (MNI) - A sharp deceleration in the Federal Reserve's preferred inflation gauge may have been driven by one-off factors, Dallas Fed economist Jim Dolmas said in an interview, noting that alternative trend inflation measures point to the rate of increases in prices holding steady at close to the 2% target.

    Personal Consumption Expenditures inflation for items excluding food and energy slid to 1.6% in March from 2.0% in December. But the Dallas Fed trimmed mean PCE inflation has stayed in a tight 1.9% to 2.0% range this year, while the Cleveland Fed median CPI actually accelerated to 2.8% year-over-year in March from 2.7% at the start of the year.

  • 2019-05-06 10:00

    By Jean Yung

    WASHINGTON (MNI) - Federal Reserve Bank of Philadelphia President Pat Harker said Monday he continues to pencil in one interest rate increase this year and possibly another in 2020, citing that transitory factors likely contributed to recent softness in inflation.

    While he's watching inflation carefully, he has yet to revise down his medium term forecast from slightly above 2%, "because I suspect some of the recent weakness is transitory," he said.

    "If any component of the outlook were to affect my view on the appropriate path of monetary policy, it would be inflation. However, we're not there yet, and it would take more data to convince me.

  • 2019-05-01 15:09

    WASHINGTON (MN) - The following is a response of Federal Reserve Chairman Jerome Powell to a question from a reporter at his press conference following Wednesday's Federal Open Market Committee meeting.

    Question: Jean Yung with Market News. If the fed funds rate keeps rising, do you see room for another IOER adjustment, and then can you speak to any other strategies or tools that might be useful for keeping a ceiling on short-term interest rates? There have been other ideas floated like the standing repo facility and targeting a different benchmark rate.

    Powell: If we need to, and as needed, we will use our tools to keep the federal funds rate somewhere in the target range. We'll do that. Don't expect to need to do it again but we don't know.