Federal Reserve

U.S. rate hike risks global fallout

21 Mar 2018

Gulf states, Hong Kong and others that peg their currency to the dollar worry that copying Fed moves will dent growth. But with five more hikes expected by the end of 2019, not doing so risks the ire of financial markets. It's a tricky dance that even China may be dragged into.

Bear Stearns is useful lesson in healthy conflict

14 Mar 2018

The Wall Street firm’s effective demise 10 years ago, like that of Lehman Brothers, was a group effort by executives and watchdogs. Now, post-crisis rules may get softened and regulators talk of forging a “partnership” with banks. A bit of mutual suspicion would be smarter.

Powell buys wiggle room with political savvy

27 Feb 2018

The new Fed chair deftly handled his first congressional testimony since taking office, giving few indications he is itching to tighten faster. If anything, his political nous and a friendly Republican majority might give the central bank more room to run the U.S. economy hot.

Trump’s next Fed pick in limbo for wrong reason

20 Feb 2018

Economist Marvin Goodfriend’s accession to the board of governors hangs in the balance after senators voiced concern about his past proposals to depreciate cash. Concern about his hawkish inflation views is fair. But penalizing him for creative thinking on a tricky issue is not.

Hints of inflation pose litmus test for Powell Fed

14 Feb 2018

U.S. consumer prices accelerated in January as the cost of food, housing, fuel and medical care rose. That’s not all bad after a decade of sub-target inflation. The fear is that new Fed boss Jerome Powell will step up the pace of rate hikes. The risk of policy error is rising.

Viewsroom: The Fed’s belated Wells Fargo beating

8 Feb 2018

Chair Janet Yellen forbids the $2 trln lender from growing bigger - on her last day in the job, and 17 months after Wells’ fake-accounts scandal hit. Meanwhile, fellow financial watchdog CFPB seems to be giving hacked Equifax a free pass. Plus: how Nintendo made a comeback.

Fed crystallizes Wells Fargo’s Tim Sloan discount

5 Feb 2018

Investors wiped $26 bln off the U.S. lender’s value after Janet Yellen censured it on her last day. That worsens the weak stock-price record since Sloan became CEO. Wells’ top line is growing more slowly than rivals’, too. A new boss could be the cultural change the bank needs.

Yellen swan song could presage Wells CEO’s

2 Feb 2018

The Fed chief used her last day in office to slap a restraining order on the $2 trln U.S. bank. It’s mostly a symbol, and a late one: boss Tim Sloan has already started to clean up the company's act. But the Fed action could persuade Wells' new chair that it’s time for a change of leader.

Bond market tightening complicates Powell’s task

31 Jan 2018

U.S. Treasury yields rose to near four-year highs even as the Fed left policy unchanged at Janet Yellen’s last meeting. A fresh growth spurt and worsening deficit outlook pose challenges for successor Jerome Powell. Hiking in a rising-rate environment is riskier for the economy.

Fed’s inflation-target rethink dodges big question

29 Jan 2018

Some U.S. rate-setters wonder about their 2 percent goal – both its level and whether it’s more a ceiling or a long-term average. The debate is welcome but could be even more radical. Today’s real issue is whether central bankers can fully explain, let alone control, inflation.

Mnuchin and Dudley exemplify a political dilemma

12 Jan 2018

The U.S. Treasury secretary, contradicting forecasts, expects tax cuts to pay for themselves. The New York Fed chief fears growing deficits and debt. Republicans may nod to the former but enough probably worry about the latter to hamper new outlays on infrastructure and the like.

Tight U.S. labor market may finally move Fed

5 Jan 2018

December’s relatively weak jobs and wage growth gives policymakers a breather. But with 2.1 mln positions created in 2017 and unemployment historically low, long-awaited pay increases - along with new tax cuts - could soon start stoking inflation. That would force the Fed’s hand.

U.S. junk bonds are time bomb with a long fuse

29 Dec 2017

Low default rates, a lack of alternatives and foreign demand will support high-yield bonds in 2018. Yet with spreads near record lows, covenants weak and leverage rising, the seeds of a bear market are plentiful. Investors should keep a wary eye for the first shoots of trouble.

U.S. banks get the hang of dying in living wills

19 Dec 2017

Watchdogs cleared the resolution plans of the eight biggest firms though four, including Wells Fargo, need improvements. It’s a far cry from 2016, when five failed outright. It’s progress not just because banks are safer, but because they finally understand what regulators want.

Yellen’s fine legacy gives way to uncertain future

13 Dec 2017

With her fifth and final rate hike, the Fed boss has put monetary policy on a path to normalization without spooking markets or hurting growth. Her successor may not be so fortunate. As the central bank gauges potential tax cuts and trade wars, its moves become less predictable.

Fed forecasts just enough sunshine for stress tests

7 Dec 2017

The central bank wants to provide more information about its models for loan losses and other inputs in the annual exams. That would suit lenders who complain the process is too opaque. But the Fed would retain some mystery, striking a balance that boosts the test’s credibility.

Yellen gives Congress parting shot on growth, debt

29 Nov 2017

The outgoing Fed boss warned of growing deficit risks just as lawmakers weigh tax cuts that would exacerbate it. It’s also up to politicians to improve education, investment and infrastructure spending. Her message of central bank limitations is one her successor will echo.

Fed chair pick shows mastery of central-bank arts

28 Nov 2017

Jerome Powell breezed through his Senate confirmation hearing with Zen-like confidence. He dodged the tax-reform debate, kept rate-hike comments predictable, backed Fed independence and defended its bank-rules review. The prospect of post-Yellen stability will please markets.

Bankers’ rule-change wish list starts in the weeds

24 Nov 2017

Executives have plenty of regulations they want a more industry-friendly Fed to overhaul. But for many the top target is an obscure supervisory letter that has turned often minor infractions into roadblocks for everything from new branches to M&A. It’s unnecessary red tape.

Fed eggheads scramble online-loans takedown

22 Nov 2017

Analysts at the central bank’s Cleveland unit had to pull a study claiming peer-to-peer lending was highly risky after its data was questioned. It’s a tricky sector to define and worsening consumer credit is a concern. But the Fed’s hasty conclusion tarnishes its own reputation.