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  • 2019-06-03 13:25

    By Jean Yung

    WASHINGTON (MNI) - The Federal Reserve may need to lower interest rates soon to move inflation and inflation expectations back toward target and insure against a slowdown in U.S. growth exacerbated by trade tensions, St. Louis Fed President Jim Bullard said Monday.

    "A downward policy rate adjustment may be warranted soon to help recenter inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown," he said in slides prepared for the Union League Club of Chicago.

    Inflation and inflation expectations remain below the Fed's 2% target, "clearly concerning" for the Fed's credibility, Bullard said.

  • 2019-06-03 10:04

    By Jean Yung

    WASHINGTON (MNI) - The expectation that a central bank will maintain a large balance sheet after concluding a period of extraordinarily easy monetary policy could result in a deeper recession, according to new research into the potential costs of quantitative easing to be presented to the FOMC on Wednesday.

    Notre Dame economists Eric Sims and Cynthia Wu find that plans for balance sheet normalization can impact how the economy fares during a period at which interest rates are near zero. Specifically, a smooth balance sheet normalization is preferable to immediate normalization or to carrying a significantly larger balance sheet going forward.

  • 2019-06-03 10:00

    By Jean Yung

    WASHINGTON (MNI) - The Fed's should simplify its post-meeting statement and convert the quarterly Summary of Economic Projections into a more detailed Bank-of-England-style Inflation Report, according to a paper based on a survey of 24 policy experts to be presented to the FOMC Tuesday.

    The dot plot would be replaced with a matrix that links each FOMC member's projections for growth, unemployment, inflation and interest rates.

  • 2019-06-03 10:00

    By Jean Yung

    WASHINGTON (MNI) - Average-inflation targeting has some advantages over price-level targeting, but Federal Reserve credibility is key for making any inflation make-up strategy work, according to a study to be presented to the Federal Open Market Committee on Wednesday as it prepares to review its policy framework.

    Lars Svensson of the Stockholm School of Economics argues that inflation make-up strategies have some desirable "automatic stabilization" properties. An inflation shortfall will raise inflation expectations, lower the real interest rate and provide stimulus to the economy, and help move inflation back toward the target.

    Average-inflation targeting also allows for flexibility.

  • 2019-06-03 10:00

    By Jean Yung

    WASHINGTON (MNI) - The U.S. labor market was "considerably less tight" at the end of 2018 than the unemployment rate might have suggested, if large numbers of people not seeking actively work or working part time but wanting to work more are taken into account, according to research to be presented to the Federal Open Market Committee on Tuesday.

    While a standard measure of labor market tightness -- the vacancy to unemployment ratio -- is about 30% higher than its value in 2001, a broader measure constructed by University of Maryland economists Katharine Abraham and John Haltiwanger is roughly at the same level as 18 years ago.

  • 2019-06-03 02:50

    TOKYO (MNI) - Japan's economy likely expanded at a faster than initially estimated in the January-March quarter, with business investment appearing to be stronger than initially expected, economists forecast Monday in the wake of a key government survey.

    The median forecast by six economists for revised Q1 GDP is +0.6% q/q, or an annualized +2.2%, compared with the preliminary estimate of +0.5% q/q, or an annualized +2.1%.

  • 2019-06-02 20:21

    --Japan Q1 Non-Financial Firm Capex +6.1% Y/Y; Q4 +5.7%
    --Japan Q1 Capex (Ex-Software) +6.9% Y/Y; Q4 +5.5%
    --Japan Q1 Capex (Ex-Software) S/A +1.1% Q/Q; Q4 +3.3%
    --Japan Q1 Manufacturer Capex +8.5% Y/Y Vs Q4 +10.9%
    --Japan Q1 Non-Manufacturer Capex +5.0% Y/Y Vs Q4 +2.7%
    --Japan Q1 Non-Financial Current Profit +10.3% Y/Y Q4 -7.0%

    TOKYO (MNI) - Combined capital investment by non-financial Japanese companies rose 6.1% on year in the January-March quarter, after rising 5.7% in October-December, a quarterly survey of capital investment and corporate profits by major companies released by the Ministry of Finance showed Monday.

    But combined capital outlays (excluding software) rose a seasonally adjusted 1.1% in Q1, slowing from +3.3% in Q4, indicating a likely downward revision t

  • 2019-05-31 12:00

    By Jean Yung

    WASHINGTON (MNI) - The conduct of monetary policy after lowering interest rates to zero is a key challenge for the Federal Reserve as it prepares to review its strategic framework this year, New York Fed President John Williams said Friday.

    "With estimates of the neutral real interest rate much lower than those that prevailed 20 years ago, the (zero lower bound) is likely to be an even more powerful force than was imagined in 1999," he said in remarks prepared for a conference at the New York Fed.

    Some of the tools the Fed used in the Great Recession trace their roots to a key conference from 20 years ago, Williams noted.

  • 2019-05-31 09:45

    LONDON (MNI) - The MNI Chicago Business Barometer increased by 1.6 points to 54.2 in May from 52.6 in April. Despite the pick-up in sentiment, the survey points to softness in business activity, as indicated by the three-month average slipping to a two-year low.

    The following are the key points from the May MNI Chicago Business Barometer:

    - The rise in business confidence was led by Production and New Orders. New Orders increased for the first time in three months, but the increase was not large enough to offset last month's fall. Production picked-up to match its three-month average but was significantly below its 12-month average.

    - Order Backlogs slipped into contraction again, the second such instance this year.

  • 2019-05-31 08:30

    By Greg Quinn

    OTTAWA (MNI) - Canada's economic growth lagged expectations in the first quarter as weak foreign trade countered gains in consumer spending and business investment.

    Gross domestic product grew at a 0.4% annualized pace, while analysts in a MNI survey had expected a 0.7% increase. Statistics Canada also lowered the fourth-quarter 2018 growth estimate to 0.3% from 0.4%.

    The report confirms the ``detour'' Bank of Canada officials said the economy took late last year, and the two quarters combined are the slowest growth since an oil crash in early 2015. Policy makers held their key rate at 1.75% Wednesday and said there's evidence the economy will gather speed later this year.