Federal Reserve

Review: The myth of Federal Reserve independence

20 Oct 2017

America’s central bank is notionally free from the executive and legislative branches. A new book by Sarah Binder and Mark Spindel argues the Fed’s actions are constrained by politics. The trouble is that politicians don’t exercise their "money power" responsibly.

Taylor-led Fed would be dangerous in manifold ways

19 Oct 2017

In addition to the Stanford economist's dogmatic bent for a programmatic monetary policy, John Taylor backs bigger regulatory changes than others in the running to be the next U.S. central bank chief. His laissez-faire ideas about policing Wall Street are loaded with risk.

Cox: Next Fed chair will need unusually thick skin

16 Oct 2017

The debate over who will lead the central bank is narrowly about hawks and doves. Policy matters, but the broader economic benefits of the Fed’s relative independence may count for more. Whoever gets the job will have to resist Trump's bullying – and stop doing Congress's job.

Jerome Powell makes for a Goldilocks Fed choice

3 Oct 2017

The central bank governor is less hawkish than other candidates on President Trump's shortlist, including Kevin Warsh. Powell also aligns with the White House on regulatory reform. And his confirmation would be easier. Those factors could make him a Fed chair who is just right.

What Carney can learn from Yellen

21 Sep 2017

Fed Chair Janet Yellen showed rate-setters can shock markets even when they stick to the script. That’s a lesson for the Bank of England’s Mark Carney, who has talked up a rate rise this year. Like her, he may have to hike without having solved a host of economic puzzles.

Fed balance-sheet runoff could rock fiscal boat

20 Sep 2017

The U.S. central bank will start shrinking its $4.5 trln bond portfolio next month. The timing is risky, with lawmakers set to spar over government funding and the debt ceiling. Fed downsizing will also cut the $92 bln it sent to Treasury last year, adding to budget pressures.

Fischer gives Trump freer rein over U.S. economy

6 Sep 2017

With the vice chairman leaving early and Chair Yellen’s term ending soon, the president can remake the Federal Reserve. His nominees will potentially make up a majority of Fed governors. That’s likely to speed the shift to a more conservative, less interventionist central bank.

Yellen sets out her stall for Trump

25 Aug 2017

In what may be her last Jackson Hole set piece, the Fed chair defended tighter regulation since the crisis 10 years ago and called for continued U.S. leadership in global forums. The president wants to unwind the reforms. It's a factor as he considers whether to reappoint Yellen.

Central bank confab may be calm before the storm

24 Aug 2017

With the U.S. and global economies in good shape, Yellen can enjoy what may be her last show in Jackson Hole. But fiscal fights in Congress, Fed bond sales and doubts about her future loom. The ECB nears its own taper even as low inflation confounds. Gray clouds are moving in.

Stress-test reform risks handing banks easy ‘A’

27 Jul 2017

Randal Quarles, Trump’s pick to head regulation at the Fed, thinks Wall Street should get details of the annual exam, such as models. He says it’s about providing questions rather than giving answers. That, though, may mean lenders have more clues, which could defeat the purpose.

Only in Trumpland is Gary Cohn suitable Fed chair

12 Jul 2017

The former Goldmanite and White House adviser is tipped as top contender to replace Janet Yellen. Though not an economist, his years in finance put him ahead of other cabinet picks lacking relevant résumés. But a Wall Street trader's temperament is no match for the staid job.

Bank of Japan can hold out as Western yields rise

7 Jul 2017

The central bank underlined its determination to keep 10-year yields close to zero by offering to buy unlimited bonds. The BOJ has the tools, market dominance and motivation to hold firm. Tighter policy in the West should help Japan by weakening the yen and importing inflation.

Draghi’s taper tizzy is sign of dangers to come

29 Jun 2017

Comments by ECB chief Mario Draghi drove up bond yields and the euro, despite later protestations that markets had misread him. The ado owes more to investor complacency than fuzzy talk. It highlights traders’ twitchiness and the challenges in withdrawing ultra-loose policy.

Foreign banks get U.S. stress-test cheat sheet

28 Jun 2017

America's top banks passed the Fed’s annual checkup, including the so-called qualitative portion that has tripped them up before. International players like Barclays and Deutsche Bank will have to take the exam next year. Their U.S. rivals have given them a road map to follow.

Draghi’s hints have more clout than Yellen’s deeds

28 Jun 2017

ECB chief Mario Draghi had more market impact by alluding to higher rates than Fed Chair Janet Yellen did by hiking them two weeks ago. That fits a recent pattern: central bankers who have yet to tighten policy are more apt to upset expectations – and that’s what moves prices.

Fed raises balance-sheet nerds’ heart rates

14 Jun 2017

The U.S. central bank hiked rates as expected. It will also soon begin shrinking its $4.5 trln stock of bonds. The process will be gradual, taking a few years to trim the holdings below $3 trln. But when one of the biggest buyers of bonds throttles back, markets may face a test.

Hadas: Misbehaving wages keep economists baffled

7 Jun 2017

Conventional economic theory says wages start to rise when labour markets tighten. It isn’t happening in the U.S., Britain, Japan or Germany. Many semi-plausible excuses and partial explanations have not solved the mystery. That leaves central bankers in a quandary.

Exchange Podcast: Henry Kaufman

6 Jun 2017

As chief economist at Salomon Brothers in the 1970s, Henry Kaufman was known as Dr. Doom for his gloomy prognostications about the economy and markets. Kaufman swung by Times Square to discuss the "Trump bump," the Fed, Wall Street culture and lessons learned at Salomon and beyond.

BofA return to health limited by D.C. drip-feed

18 Apr 2017

A tight grip on costs and better fixed-income trading gains than Goldman helped the bank crank out an estimates-beating $4.4 bln of earnings. Rising rates helped, too, but CEO Brian Moynihan needs more help from the Fed and Donald Trump to boost its lowly return on equity.

Fed’s new bank overseer could rattle rates process

17 Apr 2017

Randal Quarles looks headed to lead regulatory oversight at the central bank. He worked at Treasury but left before the crisis. He's expected to have a pragmatic view, despite Trump’s Dodd-Frank dissing. He may make more waves on monetary policy with a rules-based approach.