Federal Reserve officials saw diminishing economic benefits from the central bank’s bond buying program and voiced concern about risks to financial stability, according to minutes of their last meeting, when they took the first step to cut the pace of purchases.
This is going to be a big week for the Federal Reserve. On Wednesday, the Fed will publish the minutes of its July Federal Open Market Committee (FOMC) meeting, which should offer some color regarding the Fed's view on the labor market. On Friday, Fed Chair Janet Yellen will speak at Jackson Hole, where the theme of this year's Economic Policy Symposium will be "Re-Evaluating Labor Market Dynamics."
Today we are fortunate to have a guest contribution written by Joseph E. Gagnon of the Peterson Institute of International Economics.
On June 20, 2012, the Federal Reserve System’s Federal Open Market Committee extinguished the last shred of doubt as to whether it intends to achieve its mandated objectives. Despite a substantial markdown of an already inadequate forecast, the Fed did not take any actions that would make it possible to achieve either of its objectives over the foreseeable future.
Federal Reserve policy makers last month debated an April interest-rate hike, with several officials leaning against such a move because it would send the wrong signal and others saying it might be warranted.
“Several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate,” minutes of the Federal Open Market Committee’s March 15-16 meeting released Wednesday in Washington said.
Read about the US through the lens of politics and everything is horrible.
Look only at the US economy and things aren't so bad. And if you ask the most important US consumers, things are about to get better.
Federal Reserve Chair Janet Yellen said inflation and wage growth remain too low even as the job market improves, and she signalled that a change in the Fed’s guidance on interest rates won’t lock it into a timetable for tightening.
“It is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings,” Yellen said in testimony prepared for delivery before the Senate Banking Committee.
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Last week, the bulls pulled another save out of their hat – turning what initially looked like a losing week into a respectable advance to a new 12-week high.
The broad market rebound came on the heels of three individual policymaker statements, all aimed at restoring confidence and reviving sentiment before the selling could pick up momentum.