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’Inflation targeting, back in the frame
We know who’s brought this on. It was Ben Bernanke, last week, with confirmation of the Fed’s 2 per cent inflation target. We suspect it’s one debate that is going to grow in intensity.
First to Bruce Corneil,
It’s official: Fed’s 2 per cent inflation target
Full long-range FOMC statement belowm and click here for the Fed’s economic projections charts and tables…
Following careful deliberations at its recent meetings, the Federal Open Market Committee (FOMC) has reached broad agreement on the following principles regarding its longer-run goals and monetary policy strategy.
A central bank is only as good as its target
FT Alphaville has discussed why western central banks might be in the midst of an existential crisis. The point rests on the fact that traditional policy transmission mechanisms appear to be dying.
Simply speaking,
FOMC statement, 13 December 2011
Go back to watching Mario. See you in 2012.
– FOMC statement, 13 December 2011
Not quite, of course, but as expected, there’s nothing to see in the December FOMC statement. Rates remain the same and Twist continues.
At home with Ben
We’ve marvelled many times at Jon Hilsenrath’s extraordinary ability to mind meld with the most powerful man in global finance — Ben Bernanke (in case you were wondering).
How else to explain the string of scoops explaining the Fed’s thinking in the lead up to crucial FOMC meetings or get-togethers at Jackson Hole.
What the FOMC will (merely) discuss tomorrow
We’ll wait to see if Fedwire has any updates to his article from last week, but right now it seems likely that no major policy decisions will come out of tomorrow’s one-day meeting of the FOMC.
As our colleague Robin Harding points out,
Missing piece of the puzzle – US housing to bottom in 2012?
As Monday’s Lex notes regarding the US stock bounce has a sting in the tail
Don’t look now but amid the negative news on everything from the shambles in Europe, America’s debt wranglings or worries over China,
The Fed hath spoken
The Fed has been talking for some time about, er, how it talks. And writes.
According to Fedwire, a move to more explicit communication of the central bank’s long-term goals looks like being finalised early next year — and it could be quite explicit indeed:
Keeping it liquid Eurozone
An interesting data point in the wake of this week’s SMP sterlization fail.
The amount of cash on overnight deposit at the ECB has breached the ‘psychologically important’ €300bn for the first time since June 2010.
Behind those Bloomberg banks-profit-from-Fed figures
Bloomberg fought and won a lengthy case against the Federal Reserve to obtain the details of the various US bailout programmes. That was back in the summer. FT Alphaville salutes them for it, as have many others.
Central bankers: pursued by a bear
That is US and UK central bankers pursued by über bear Albert Edwards of Société Générale.
Edwards is rather peeved that researchers at the Federal Reserve seem to have concluded that the Fed wasn’t responsible for the housing boom that has turned into the biggest bust since the 1930s.
Meet the new Fed stress tests…
… same as the old Fed stress tests.
At least that’s the prediction of Nomura’s Glenn Schorr, whose note published on Thursday plays down any expectations that the forthcoming Comprehensive Capital Analysis and Review (CCAR,
The trouble with seigniorage
Gavin Davies asks a good question on his FT blog: Does the ECB really have a silver bullet?
An increasing number of market participants want to believe it does, and some have even convinced themselves that the ECB will pull the trigger on unsterilised bond buying,
A snapshot of collateral stress, courtesy of the Fed
Many might not be aware, but the Fed introduced a quarterly survey “on changes in credit terms and conditions for securities financing and over-the-counter derivatives transactions” over a year ago.
The point was to shed light on the mysterious practices of the shadow banking sector and in particular the daily goings on in the repo finanicng markets.
US Markets Live: Bernanke saves the world edition
And by “Saves the World” we mean “Thanks the stars that he’s not Mario Draghi”.
We’re kicking off at 2:05pm in New York (6:05pm in London), ten minutes before we find out that Ben is late and wait another ten minutes the presser is scheduled to begin.
Fedwire reports… the return of MBS purchases?
Fresh intel stolen from inside the halls of the Eccles Building (not really, but you get the point):
Federal Reserve officials are starting to build a case for a new program of buying mortgage-backed securities to boost the ailing economy,
Should the Fed target a nominal level of GDP?
Anything Lord Wolfson can do…
LONDON, Oct 19 (Reuters) – A leading British businessman is offering a 250,000 pound ($390,000) reward for economists who can come up with the best plan for countries to quit the European single currency zone.
The not-so-fearless Fed?
The narrative around the Fed’s announcement on Wednesday is that it went ahead with a $400bn ‘twist’, towards the larger end of what was expected — despite some pretty heavy pressure from the Republicans a couple of days earlier.
Breaking on FedWire…
This is getting ridiculous.
At this rate there won’t be any point logging on to read the FOMC minutes on Wednesday evening. FedWire, the unofficial/official news service of the Federal Reserve, has done such a comprehensive briefing the market on what to expect that there can’t possibly be any surprises…
The pre-conditions for a double-dip
Fed tightening, apparently.
(Not that there are a lot of examples to go on.)
This is from Spyros Andreopoulos at Morgan Stanley. He sifts through all the slowdowns — defined as two successive quarters of growth not exceeding 1 per cent — recorded since 1950.
Monetarists and IOER
We’ve just explained RBC Capital Markets’ thinking as to why cutting IOER might be worse than ineffective. That it could instead encourage systemic risk by increasing the incentive to fail to deliver securities for settlement,
Why cutting IOER could be suicidal
By Jove! Someone’s finally got it.
Cutting interest on excess reserve is a hugely risky option for the Fed, and could do more damage than good (leading even to major systemic issues). We’ve said as much,
Goldman says let’s Twist again
Found.
Someone who thinks a change in the composition of the Federal Reserve’s balance sheet (a new Operation Twist) would be a good idea.
Guess who? (Obviously it’s not Bill Gross).
Give up?
OK then,
On the difference between virtuous and vicious circles
There’s something to reading Ben Bernanke’s speeches from a passive communication point of view. It’s not so much what he says, but what he doesn’t say. Or rather what he infers by saying something else.
The three Fed stooges (and Mr Gross)
The Federal’s reverse unofficial/official news service – FedWire, or Jon Hilsenrath of the Wall Street Journal — has spoken.
The FOMC has a menu of three options at its two-day meeting beginning on September 20,
Some extremely special Treasuries
Here’s an interesting datapoint Fred Sommers, of the Basis Point Group, on Monday.
As we’ve written before, Sommers is among a number of back office specialists who have become increasingly concerned about a growing lack of discipline in trade settlements since 2008.
Jedi Kocherlakota on the ways of the FOMC force
As FT Alphaville noted before, the role of the FOMC is about more than just conducting monetary operations. It’s also about moulding investor opinion and expectation.
So, when traditional monetary tools of the Federal Reserve dry up,
The overnight Black Swan
It used to be that lending was done on unsecured term durations, all the time.
Then we had the credit crunch, and unsecured term lending died.
Then everyone started lending on a collateralised basis.
Goldman’s Q(E3)&A
There was no press conference with Ben Bernanke after the August 9 FOMC statement or following his Jackson Hole speech — and there won’t be another until after Congress pays attention and starts pulling its weight around here November 2.
The Fed’s oil easing
This post is going to address two fundamental points:
1) Why it might make sense for the Fed (or a respective government agent) to intervene in commodities.
2) Whether the Fed has indirectly already intervened and does this explain the mysterious WTI-Brent disconnect?
While we appreciate the above might be considered controversial,