Federal Reserve System
US banks hold up under Fed stress tests
Latest annual stress tests show 31 largest bank-holding companies would lose $490 billion under the Fed’s severely adverse scenario, which has been tightened compared to 2014
Ongoing reports of recovery add little to FOMC debate
Latest Beige Book shows economic activity expanding at a steady pace, while Esther George and Charles Evans take different sides in the FOMC’s inflation debate
Fed officials debate research on equilibrium real rates
Research presented at US Monetary Policy Forum says uncertainty around equilibrium rate means the Fed should delay tightening policy; Loretta Mester and William Dudley discuss findings
Yellen sees ‘room for improvement’ on risk management
Fed chair says banks have strengthened their risk management, internal controls and governance, but more can be done and supervisors will be ‘watching closely’
Philadelphia Fed names Patrick Harker president
Charles Plosser retired yesterday and Patrick Harker will take the reins in July; his background includes a host of academic posts and a spell on the Philadelphia Fed board
Plosser and Conti-Brown debate Fed governance reforms
Peter Conti-Brown proposes giving the Fed’s board of governors the power to appoint and remove Reserve Bank presidents; Charles Plosser rejects arguments in his response
Paper tackles US inflation puzzle with new Phillips curve
Authors of research published by IMF find core inflation movements can be explained by anchored expectations and short-term unemployment “stories”
Yellen defends relationship with White House
Fed chair tells congressional committee she did not discuss monetary policy with Treasury secretary or executive branch of government, when quizzed on ‘near-weekly’ meetings
Yellen sheds light on lift-off communication
Fed chair discusses how the Federal Reserve will communicate its thought process on policy normalisation; rejects FOMC reform and Audit the Fed bill in congressional hearing
Fed officials grapple with lift-off details
Minutes from January FOMC meeting reveal extensive discussion about the tools at the Fed’s disposal when it wants to raise rates; idea of higher cap for overnight RRPs explored
Fed’s Powell sets ‘high bar’ for leaning against credit cycles
Governor Powell says leaning against the cycle through supervisory policy would ‘almost surely interfere’ with traditional function of capital markets
Fed officials see ‘audit’ bill as threat to independence
Charles Plosser is the latest FOMC member to criticise bill that could see monetary policy decisions reviewed; Richard Fisher and Jerome Powell also raise concerns
IMF too sluggish to be global lender of last resort, say Allen and Moessner
The IMF’s response to the financial crisis was too weak and too late, leaving the Federal Reserve to pick up the slack, William Allen and Richhild Moessner argue in the Central Banking Journal
A more effective strategy for the Fed
The Fed should adopt a Taylor-rule approach to ensure policy adjustments are only made due to changing macroeconomic fundamentals. This would mean it should raise rates and alter its communications
Justin Lin on China, economic growth and the international monetary system
Former World Bank chief economist on why a multiple currency system could increase monetary instability, China should be wary of full capital reform and infrastructure investment will boost growth
Three strikes against the Federal Reserve
If you want to know why US economic recovery has been so sluggish, look no further than the policies of the Federal Reserve, argues Allan Meltzer
House committee calls on Fed to change leverage ratio
Segregated initial margin should be allowed to reduce exposure in cleared trades, says House Agriculture Committee in letter to Fed chair, Janet Yellen
Dallas Fed’s Fisher calls for FOMC reform
Richard Fisher unveils a range of proposals aimed at reducing the power of the New York Fed and Board of Governors in monetary policy decisions
Carney: Expectations of Fed tightening could trigger ‘sharp adjustment’ in financial markets
FSB chairman says the ‘ongoing disconnect’ between risk-taking in financial markets and the real economy ‘poses the threat of sharp adjustments’
FOMC forward guidance adds to 'market confusion', say leading US economists
The Fed lacks 'clearly formulated' normalisation strategy, paper to be published by Central Banking argues; calls for adherence to 'disciplined inflation targeting rule'
Meltzer accuses Fed of three ‘major’ errors
Writing in the Central Banking Journal, Allan Meltzer argues the Fed continued QE for too long, while relying too heavily on ‘noisy’ data and too little on monetary and credit aggregates
New York Fed unveils new way to calculate funds rate
Central bank plans to base the rate on a new dataset that captures a broader range of market activity; move likely to happen in about a year’s time
Fed’s Tarullo casts doubt on counter-cyclical tools
Daniel Tarullo questions ability of macro-prudential tools to temper booms and busts, and calls for a new ‘prudential market regulation’ to tackle shadow banking risks
Fed’s Powell: Virtual currencies ‘not ready’ for role in payments reform
Governor Jerome Powell says virtual currencies could play a ‘bigger role’ in the future, but are not yet ‘mature enough’ to contribute to the Fed’s faster payments initiative