Federal Reserve

Buybacks prolong Wall Street rally nobody loves

20 Jun 2019

U.S. stocks are near record highs – thanks in part to purchases by their issuers. Investors are pulling out of equities and fund managers report extreme bearishness amidst a weakening global economy. Hopes of Fed rate cuts are a fragile support when it’s the only game in town.

Fed gives data one more chance

19 Jun 2019

The U.S. central bank held rates steady, though no longer says it’s patient. Policy setters are up against weaker global growth, trade worries, more dovish signals from Europe and Japan, market hopes of rate cuts and Donald Trump’s brickbats. The tension may last only six weeks.

Fed could do worse than mimic Donald Rumsfeld

5 Jun 2019

George W. Bush’s defense secretary famously talked of known knowns, known unknowns, and unknown unknowns. The U.S. central bank, seeking better communication, could borrow the categories. They help explain why markets now expect interest-rate cuts while Fed rate-setters don’t.

Bond market rate cut beats Fed to the punch

29 May 2019

U.S. Treasury yields have fallen over a quarter point in a month, equivalent to a central bank easing. Blame trade worries plus structural factors like weak inflation and negative rates overseas. Fed rate cuts are never a one-off; this market-led one is unlikely to be different.

The Exchange: John Taylor

13 May 2019

The economist and leading proponent of a rules-based strategy for monetary policy recently convened a powwow at Stanford’s Hoover Institution at which top policymakers brought diverse views on the Fed’s conduct to the fore. He fillets some of the choicest bits with Rob Cox.

Cox: Trump Fed misfire rallies its true believers

9 May 2019

It’s not the first time a U.S. president has tried to meddle in monetary policy. But the failed shoehorning of partisans onto the central bank’s board has bound hawks and doves together in a robust defense of the institution’s independence, as a recent Stanford confab revealed.

Fed traditions live to fight another day

2 May 2019

Donald Trump has now lost both his picks for a spot at the U.S. central bank after Stephen Moore joined Herman Cain in taking himself out of contention. Their own shortcomings were to blame more than senators’ respect for the Fed’s independence. But it’s a reprieve all the same.

Climate risk gets the right kind of oversight

18 Apr 2019

Central banks presiding over almost half the planet’s GDP plan to treat global warming as a threat to financial stability. It’ll add heft to existing pressure from investors and make it harder for companies and their lenders to ignore the longer-term impacts of climate change.

Hadas: Biased central bankers beat foolish ones

10 Apr 2019

President Trump’s pick of loyal supporter Herman Cain as a U.S. Fed governor is a bad idea. Not because of his partisan bias, since central banks are inherently political. But monetary policy is too poorly understood and unpredictable to be entrusted to amateur ideologues.

Fed has little need for what Cain’s serving

4 Apr 2019

As a governor, Herman Cain’s business nous might help the U.S. central bank, which can suffer from economist group think. He excelled at Burger King and Godfather’s Pizza. Yet Cain is a political figure who once backed the gold standard. Some ideas are too far outside the box.

Trump takes politics to heart of Fed with nominee

22 Mar 2019

The president wants to put conservative commentator Stephen Moore on the central bank board. The former campaign aide helped draft the administration’s tax cuts and has called for Fed Chairman Jerome Powell to resign. It’s a troubling shift from more expert, independent choices.

Fed waves white flag on normalization

20 Mar 2019

The U.S. central bank held interest rates steady, cut its forecast for hikes and will stop shrinking its balance sheet in September. There are signs of slowing global and domestic growth, but the package looks more like a market wish list than the result of data-driven analysis.

Fed settles for big balance-sheet future

27 Feb 2019

Chairman Jay Powell told Congress that the U.S. central bank would stop running down its assets this year. That means holding at least $3.5 trillion, four times the pre-crisis figure. That’s not the “normalization” many were looking for – but there are reasons for it.

Jerome Powell’s boon is Mario Draghi’s bane

11 Feb 2019

Inflation in the U.S. and the euro zone is easing and looks set to subside further. That will help the Federal Reserve boss justify a pause in rate hikes, but is a headache for his European Central Bank peer who has yet to tighten monetary policy and has less room to manoeuvre.

Central banks’ gold fever is anything but reckless

5 Feb 2019

Their 2018 purchases of the yellow metal were the second-highest on record and up nearly three-quarters from a year ago. But this isn’t a speculative punt on prices rising. Instead, it’s a logical precaution against rival currencies and U.S. self-harm eroding dollar dominance.

Healthy U.S. job growth tells markets to cheer up

1 Feb 2019

Employers added a robust 304,000 positions last month. The jobless rate rose to 4 pct but it’s due to the government shutdown. The Fed recently reassured gloomy investors worried about global growth. But the U.S. economy is a better guide for the central bank than stock prices.

Fed patiently tells market it will be patient

30 Jan 2019

Stocks rose on the U.S. central bank’s comments reiterating that interest-rate moves depend on economic conditions. Ditto for the pace of shrinking its balance sheet. That’s nothing new, yet overly sensitive investors needed the reminder. For now the Fed is holding their hands.

Trump’s Fed pressure is a paper tiger, so far

14 Jan 2019

The U.S. president often bashes the central bank’s rate increases on Twitter. It’s unhelpful but transparent – which makes it easier for the Fed to resist. The real danger is if Trump bullies Jerome Powell behind closed doors, or changes his tactics for the two open board seats.

Guidance is a two-way street with Fed and markets

10 Jan 2019

Jerome Powell says the U.S. central bank will be patient in weighing new rate moves. Previous hawkish comments unsettled investors, helping tank stocks last month. The two are learning to read each other, but a data-dependent message may get tricky if the economy starts to turn.

Market adopts role of adult in the room

26 Dec 2018

U.S. stocks have fallen sharply, but in an orderly way. Fund managers and exchanges have handled heavy volume smoothly. That’s despite the unsustainable policies of the Trump administration, and clumsy efforts to instill calm. As long as those persist, prices can fall further.