he Federal Reserve is expected as soon as later this week to release a proposal that would reflect a global agreement on bank capital, according to analysts.
Originally from MarketWatch
There will be a one day meeting of the Federal Open Market Committee (FOMC) on Tuesday, December 13th. The FOMC statement will be released around 2:15 PM ET on Tuesday.
Although there are several topics currently being discussed - such as adding a probable path for the Fed funds rate to the quarterly forecasts, and another round of QE ("QE3") by buying additional Mortgage Backed Securities (MBS) - those possible changes are more likely to be announced early next year.
So I expect no changes to interest rates, or to the program to extend the average maturity of its holdings of securities, or to the policy of reinvesting principal payments.
The FOMC statement might be changed to reflect the slight improvement to incoming data - but the wording changes will probably be minor. The trends the FOMC mentioned in November have continued: "economic growth strengthened somewhat", "unemployment rate remains elevated" and "Inflation appears to have moderated". And the downside risks remain: "there are significant downside risks to the economic outlook, including strains in global financial markets".
So I expect few changes to the FOMC statement, and the key sentence will remain unchanged: "The Committee ... currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."
Charles Evans will probably argue for additional policy accommodation and he is likely to dissent again.
Yesterday:
• Summary for Week ending Dec 9th
• Schedule for Week of Dec 11th
Originally from Calculated Risk
On Wednesday, the Federal Reserve and other central banks agreed to cut the cost for commercial banks to borrow dollars from the central banks. The move was aimed at European banks, which have seen their dollar funding costs spike to three-year highs on worries about huge losses on sovereign debt. Up next should be a cut in the cost for U.S. banks to borrowing from the Fed if they need, analysts said."It is now cheaper for foreign banks to borrow dollars from their local banks than it is for U.S. banks to borrow dollars from the Fed, so we could see a 25 basis point cut in the discount window in the coming days to level the playing field," said Michael Cloherty, head of U.S. rates strategy at RBC Capital Markets.Incidentally, some Fed officials have wanted to do the opposite – increase the discount rate – to get it back towards its level before the U.S. credit crisis. That's according to minutes from Fed discount-rate meetings in October, released Tuesday. Read minutes from Fed discount-rate meetings. The central banks on Tuesday agreed to lower the pricing on existing temporary U.S. dollar liquidity swap arrangements by 50 basis points, putting the new rate as the U.S. dollar overnight index swap rate plus 50 basis points. A basis point is one one-hundredth of a percentage point. Read full story on central-bank swap move.Cloherty and others had mused that the Fed could cut the swap rate by 25 basis points. But global central banks were more aggressive and cut it 50 basis points. The move should keep the market rate for bank borrowing – the London Interbank Offered Rate, or Libor -- from jumping because it makes the swap lines an economically smart option, he said.But the reaction in markets – a sharply higher euro EURUSD and stocks (Dow Jones Industrial Average DJIA up 428 points) and drop in Treasury prices 10_year – may be overdone."It doesn't change any of the fundamental issues in Europe," Cloherty wrote in a note. "The major help to risk assets is that those investors no longer will need to see LIBOR rise relentlessly (and it should make year-end a little less messy), but we don't think this is a real game-changer."-- Deborah Levine
Originally from MarketWatch
SAO PAULO (Reuters) - The performance of the U.S. economy, while not terribly strong, has exceeded expectations according to recent data and could log a growth rate above 3 percent in the last three months of the year, a top Federal Reserve official said on Monday.
Originally from Reuters: Business News
The Fed in the week ahead is widely expected to pull the trigger on a new easing program, as the European debt crisis continues to boil.
Originally from All News, Video and Posts related to TOPIC: Federal Reserve
Forexpros – Manufacturing activity in the Philadelphia-region rose less-than-expected in July, official data showed on Thursday.<br /><br />In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved to 3.2 in July from June’s reading of minus 7.7. <br /><br />Analysts had expected the index to increase to 3.4 in July.<br /><br />On the index, a reading above 0.0 indicates improving conditions, below indicates … [visit site to read more] or compare Best Credit Cards and Balance Transfer Credit Cards
Originally from DailyMarkets.com
From the Associated Press:
The Federal Reserve acknowledged Wednesday that the economy is growing more slowly than it expected. But it said it will complete its $600 billion Treasury bond buying program by June 30 as planned and announced no further efforts to boost the economy.
Ending a two-day meeting, the Fed repeated a pledge to keep interest rates at record lows near zero for “an extended period,” a promise it’s made for more than two years.
Fed officials said in a statement that they think the main causes of the economy’s slowdown, such as high gas prices and supply disruptions from Japan’s disasters, are temporary. Once those problems subside, Fed officials said the economy should rebound.
But at a news conference after the statement was released, Federal Reserve Chairman Ben Bernanke acknowledged that some of the problems slowing the economy could persist into next year.
“Maybe some of the headwinds that are concerning us, like weakness in the financial sector, problems in the housing sector … some of these headwinds may be stronger and more persistent that we thought,” Bernanke said. He was responding to a question about whether more permanent factors had led to the dimmer outlook.
Initially, the Fed announcement had little effect on the stock and bond markets. But stocks fell later in the day, shortly after Bernanke acknowledged that some of the problems affecting the economy may go beyond temporary factors. The Dow Jones industrial average closed down 80 points for the day.
Read the whole thing here.
Originally from Big Government
In our preview of the FOMC interest rate decision and statement we highlighted that the Fed was likely to show concern about the economy, but also stick to the scrip in regards to ending its $600 billion quantitative easing program this month. It would however pledge to continue to keep its balance sheet constant by re-investing maturing Treasurys. And that it would keep its “extended period language”.
No surprises there:
From the Statement: “To promote the ongoing economic recovery … [visit site to read more] or compare Best Credit Cards and Balance Transfer Credit Cards
Originally from DailyMarkets.com
WASHINGTON (MarketWatch) - The output of the nation's factories, mines and utilities was weaker-than-expected in April as a parts shortage due the Japanese earthquake led to a drop in auto assemblies, the Federal Reserve said Tuesday. Industrial production was flat in April, well below the 0.3% increase expected by economists surveyed by MarketWatch. Adding to a sense of weakness in the report, industrial output in February and March was also revised lower. Factory activity alone fell 0.4% in April, which was the first decline after nine straight monthly gains. Total motor vehicle assemblies dropped to a 7.9 million unit annual rate in April from a 9.0 million rate in March. Excluding motor vehicles and parts, factory production rose 0.2% in April. Capacity utilization - a gauge of slack in the economy - slipped to 76.9% in April from 77.0% in March.
Originally from MarketWatch
Forex Pros – Manufacturing activity in Richmond fell more-than-expected in March, official data showed on Tuesday.
In a report, the Federal Reserve Bank of Richmond said that its manufacturing index fell to 20.0 in March, compared to a reading of 25.0 in February.
Analysts had expected the index to decline to 23.0 in March.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
According to the report, shipments and new orders grew at a … [visit site to read more] or compare Best Credit Cards and Best CD Rates
Originally from DailyMarkets.com
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