Neel Kashkari, the Minneapolis Fed president who has been a vocal opponent of interest rate hikes, Friday laid out new thinking on a key benchmark as he expressed support Friday for the central bank's decision earlier this week to hold rates in place, likely for the year. Kashkari, who will get a vote on the Fed's rate-setting committee again next year, said in a series of tweets that he needs more time to decide whether the current slowdown in jobs and economic growth — a key reason for the Fed's pause — is "real or just a blip." More significantly, he said the dovishness he has long felt about rate hikes was shaped by a belief about a fundamental target called the neutral interest rate that may actually have be outdated. The neutral interest rate is one that is high enough to contain inflation but low enough to avoid recession. He wrote that, when he opposed rate hikes in 2017 and 2018, he didn't think any of them were high enough that they went past neutral and put the … [Read more...] about After Fed halts rate hikes, Kashkari signals a rethink on fundamental measure
Fed hikes rate
Fed holds rates steady, to slow balance sheet reduction
WASHINGTON (Reuters) - The Federal Reserve held interest rates steady on Wednesday and its policymakers abandoned projections for further rate hikes this year as the U.S. central bank flagged an expected slowdown in the economy. Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis In a major shift in its perspective, the Fed also now expects to raise borrowing costs only once more through 2021, and no longer anticipates the need to guard against inflation with restrictive monetary policy. After a two-day policy meeting that sealed the switch to a less aggressive posture, the Fed also said it would slow the monthly reduction of its holdings of Treasury bonds from up to $30 billion to up to $15 billion beginning in May. It said it would end its balance sheet runoff in September provided the economy and money market conditions evolved as expected. Redemptions of mortgage-backed securities would at that point … [Read more...] about Fed holds rates steady, to slow balance sheet reduction
Fed leaves rates unchanged, says will be ‘patient’ on future hikes
WASHINGTON (Reuters) - The Federal Reserve held interest rates steady on Wednesday but said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty about the U.S. economic outlook. FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo While the Fed said continued U.S. economic and job growth were still “the most likely outcomes,” it removed language from its December policy statement that risks to the outlook were “roughly balanced” and struck language that projected “some further” rate hikes would be appropriate in 2019. In a separate release from its policy statement, the U.S. central bank also said while it was continuing its monthly balance sheet reduction, it was prepared to alter the pace “in light of economic and financial developments” in the future. The Fed said in that same document that it had … [Read more...] about Fed leaves rates unchanged, says will be ‘patient’ on future hikes
Fed leaves rates steady, says will be ‘patient’ on future hikes
WASHINGTON (Reuters) - The Federal Reserve held interest rates steady on Wednesday but said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty about the U.S. economic outlook. FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo While the Fed said continued U.S. economic and job growth were still “the most likely outcomes,” it removed language from its December policy statement that risks to the outlook were “roughly balanced” and struck language that projected “some further” rate hikes would be appropriate in 2019. In a separate release from its policy statement, the U.S. central bank also said while it was continuing its monthly balance sheet reduction, it was prepared to alter the pace “in light of economic and financial developments” in the future. Taken together, the two documents were meant to … [Read more...] about Fed leaves rates steady, says will be ‘patient’ on future hikes
No Fed hike this week but don’t rule out more
No Fed hike this week but don’t rule out moreWASHINGTON, D.C.: The US Federal Reserve will hold its fire this week, leaving interest rates untouched and letting markets calm down after a tumultuous end to 2018. Coming off Wall Street’s worst December since the Great Depression and amid mounting fears about the global economy, Fed policymakers are now unanimously hammering a single message: they will be “patient” before pulling the trigger again. Fed Chairman Jerome Powell is likely to stick to that script when he announces the Federal Open Market Committee’s latest monetary policy decision on Wednesday. Futures markets are wagering the central bank will actually stand pat for all of 2019, with a growing share betting the Fed could even begin cutting interest rates as soon as next December. Maybe they should think again.While a cold wind blew at the end of last year, gathering conditions suggest the Fed could feel compelled to raise the key lending rate as … [Read more...] about No Fed hike this week but don’t rule out more