I’ve been pretty harsh in this column on Federal Reserve monetary policy, but the one area that I haven’t written much about– financial regulation – is probably the main area where the Fed does deserve a lot of credit.
In her speech at the Jackson Hole symposium late last week, Fed Chair Janet Yellen probably disappointed a lot of market watchers for her failure to talk about interest rates or unwinding the Fed’s balance sheet. Instead, she spent most of her speech defending the Fed’s actions in the regulatory realm in the wake of the global financial crisis and pushed back against critics who want to roll back those regulations, including President Trump, who vowed that he wants to “do a big number” on Dodd-Frank.
If Yellen wants to be reappointed to her position by Trump when it ends in February, she certainly didn’t sound like it. Then again, making comments in opposition to Trump is hardly a heroic stance.
Still, she deserves credit for defending the Fed’s position on bank regulation, and the next Fed chair, whether it’s Yellen, Gary Cohn, or someone else, should stick with the current policy, which will go a long way toward keeping our banking system safe and secure and make sure that the global financial crisis doesn’t repeat itself. After all, if you can’t trust keeping your money in a bank, nothing else matters. Continue reading "Fed Can't Backtrack On Regulatory Reforms"
By: Elliott Wave International
This question is not as preposterous as it may seem.
For the financial markets, the biggest event of the week starts tomorrow: On Wednesday and Thursday (Feb. 10-11) Fed chair Janet Yellen will appear before Congress to deliver her semi-annual Monetary Policy Report.
"It's huge." That's how one strategist put it this morning, in a CNBC interview about the importance of Yellen's testimony.
Why are all eyes on Yellen? Maybe because by now, almost everyone has forgotten how powerless the Fed appeared in 2007-2009, when none of its measures could stop the financial crisis. Despite the recent market chaos, six years of rising stock prices reaffirmed the notion that the Fed can move mountains. "As the Fed goes, so do the markets" is the current mantra -- so, on Wednesday and Thursday, analysts will be listening carefully: Will Yellen mention the ongoing market turmoil? Continue reading "Can The Fed Drop Interest Rates Below 0%?"
Surprise, surprise. The Fed isn't going to raise rates in June after all.
While the just-released minutes of the Fed's April 28-29 monetary policy meeting revealed the central bank "did not rule" out the possibility of raising rates at its June 16-17 meeting, "many participants thought it unlikely that the data available would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied."
In other words, economic reports over the past several months haven't come close to giving the Fed comfort to start normalizing monetary policy – i.e., raising rates – without jeopardizing growth, or what little there has been recently.
In the first quarter, U.S. GDP rose only 0.2%, down from the 2.2% growth rate in the fourth quarter of 2014. But economists are now expecting that figure to be revised downward next Friday, possibly to show negative growth. Continue reading "The Waiting Is The Hardest Part"
My educated interpretation of what Janet Yellen told the Senate Banking Committee on Tuesday boils down to this: The Fed is going to raise interest rates when it is going to raise rates and not one day earlier.
In other words, I don't have any idea, and it's likely she doesn't either. But it's probably not likely to happen in the immediate future, maybe not even this year.
Whether that's a mistake or not is a different matter (I think it is). But it was clear – or rather unclear – that the Fed has no intention of doing anything about raising short-term rates above near-zero anytime soon.
Analysts and pontificators, of course, did their best to put their own spin on what she said (kind of like what I'm doing now). In typical Fed Chair-speak, Yellen provided a bunch of "we might do this – but then again we might not" comments that could mean just about anything. Continue reading "So What Did Yellen Actually Say?"