Fed’s Williams argues for just a ‘smidgen’ slower process of normalizing rates

The Federal Reserve probably needs to keep U.S. interest rates lower for longer given headwinds from weak global economic growth, a stronger dollar and an unexpectedly sustained drop in oil prices, a top Fed official suggested on Friday. San Francisco Federal Reserve Bank President John Williams told reporters he now sees slightly slower growth, slightly higher unemployment, and about a tenth of a percent lower inflation this year than he had expected in December…

U.S. housing starts rebound and permits surge but industrial sector struggles

U.S. housing starts in November rebounded from a seven-month low and permits surged to a five-month high, signs of strength in the housing market that could give the Federal Reserve more confidence to raise interest rates on Wednesday. Other data on Wednesday showed the industrial sector continuing to struggle under the weight of a strong dollar, cutbacks in inventory investment as well as spending cuts by energy firms in response to persistently low oil prices…

U.S. Fed, ECB ready for periodic market jolts as they move in opposite policy directions

The world’s top two central banks accept they will face periodic market jolts as they move in opposite policy directions, senior officials say, with such risks inevitable given the hugely differing fortunes of the U.S. and European economies. The European Central Bank and U.S. Federal Reserve – which appear poised respectively to ease and tighten monetary policy – talk to each other regularly but do not coordinate policy or try to guess what the other may do next, the central bankers say…

Once ‘liftoff’ occurs, Fed debate will shift to pace of monetary policy tightening: Fed’s Bullard

Debate within the U.S. Federal Reserve will quickly turn to the appropriate pace of monetary policy tightening after an initial rate hike, a battle that may be fought in an environment of unexpectedly higher inflation, St. Louis Fed President James Bullard said on Friday. The unexpectedly strong U.S. jobs report on Friday raised the already strong likelihood that the central bank will raise rates in December, ending a seven-year run of near-zero policy…

IMF warns against raising interest rates too soon

Just. Don’t. Rush. It. The International Monetary Fund has warned the world’s biggest economies against raising interest rates too soon. There are still too many risks to global growth, the fund said. Advanced economies should continue to pursue “growth supportive policies.” The warning came in a letter to central bankers and finance ministers of the G-20 group of leading economies, who are meeting in Turkey this week…

The People’s Bank of China likely to ease monetary policy again by year’s end

China’s central bank is highly likely to ease monetary policy again by the end of this year, according to economists surveyed by Reuters, as it seeks to support a rapidly cooling economy and calm financial markets. The People’s Bank of China cut interest rates and lowered the amount of reserves banks must hold for the second time in two months on Tuesday, acting amid pressure from a global stock market rout and massive outflows from its markets…

120 yen per dollar is acceptable, says Japan PM adviser Hamada

(Reuters) – The yen is fairly valued around current levels, a key economic adviser to Prime Minister Shinzo Abe said on Tuesday, a day after comments he made were taken to mean the yen was too weak. Koichi Hamada, an emeritus professor of economics at Yale University, also told Reuters he was not suggesting the Bank of Japan ease policy at its next meeting this month, in contrast to the recent views of another Abe adviser…

Euro could sink to levels not seen since late 2003

(Reuters) – The euro’s slide is not yet over because diverging monetary policies at the European Central Bank and the United States Federal Reserve will sink the currency to levels not seen since late 2003, a Reuters poll found. Fears that cheap oil will tip the now 19-member bloc into a deflationary spiral have increased calls for the ECB to take urgent action, possibly as soon as the Governing Council’s Jan. 22 meeting…

Inflation-targeting works, but other methods may be more effective: Fed’s Williams

(Reuters) – A top Federal Reserve policymaker on Friday said global central banks have had good success with inflation-targeting, but should consider other methods that may work better in the face of low interest rates and the risk of asset bubbles…

Fed set to end bond-buying even as global slowdown poses U.S. risk

(Reuters) – The U.S. Federal Reserve on Wednesday is expected to shutter its bond-buying program, closing one controversial chapter in its crisis response even as it struggles to manage a full return to normal monetary policy.
The Fed is likely to announce at the end of a two-day meeting that it will no longer…

Dallas Fed chief sees rate hikes early next year ‘or potentially sooner’

(Wall Street Journal) – Federal Reserve Bank of Dallas President Richard Fisher said Wednesday that mounting signs of financial-market excess and continued economic growth mean the U.S. central bank will need to raise interest rates by early next year “or potentially sooner.” “Given the rapidly improving employment picture, developments on the inflationary front, and my […]

U.S. economy still needs Fed’s ‘unusually accommodative’ monetary policy: Yellen

(Reuters) – The Federal Reserve will still need to deliver “unusually accommodative” monetary policy even once the U.S. economy returns to “where we want it to be,” Fed Chair Janet Yellen was quoted as saying in a magazine article…

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