Federal Reserve System
Fears rise over breakdown in Basel and IFRS standards
Bretton Woods institutions worried about growing divergence in capital and accounting standards as credit impairment tsunami looms; US and many emerging economies skirting the rules
High US inflation should not be ruled out
A prolonged health crisis raises the risk that supply-side factors, monetary expansion and rising personal savings could stoke hidden inflationary pressures
Fed policy is too tight given FOMC projections – former Fed economist
“An outlook that bad for that long is a clear sign that policy is too tight,” Joseph Gagnon says
Fed promises to keep buying assets at current rate
Fed will hold accommodation in place for “however long it takes”, chair Jerome Powell says; FOMC releases first projections this year
Balance sheets could grow by 23% of GDP in largest advanced economies – BIS
Economists forecast balance sheets will remain large for the foreseeable future
Fed makes last-minute changes to ‘Main Street’ programme
Programme will be open “soon”, despite plans to launch in May
Mass bankruptcies should feature in Fed stress tests – former officials
Crowding of bankruptcy courts can effectively double loss given default, says Jeremy Stein
US unemployment falls sharply in May
Unemployment rate declined to 13.3% from 14.7% in April, despite widespread fears it would rise
Former officials say Fed should impose tighter regime
Donald Kohn and Jeremy Stein warn of risks and say Fed should stop US banks paying dividends
Chilean central bank requests access to NY Fed’s repo facility
Central Bank of Chile also seeks to expand renminbi swap line with PBoC
Central banking enters a new era
Central banks face a delicate balancing act to preserve their reputations as they evolve into ‘buyers of last resort’ and some of their actions appear functionally equivalent to ‘monetary financing’
US needs aggressive fiscal policy and negative rates – St Louis Fed economist
Policy response must be powerful enough to overshoot previous growth trend for a period, researcher says
Stress levels rising: investment funds and the Covid-19 shock
Extreme market stresses due to Covid-19 are underscoring the central role non-banks play in crisis contagion, as in 2008. Were regulators better prepared this time?
What would yield curve control mean for Fed’s asset purchases?
Policy may imply shift in rationale from crisis to recovery, and potentially more volatility in purchases
Fed lifts lid on ETF purchases
Biggest holding is of a BlackRock ETF, the same firm managing the purchases
US disinflation accelerated in April
Core inflation sees steepest drop since the 9/11 attacks
Carstens, Jordan, Weber: respect the boundaries of fiscal and monetary policy
Axel Weber says huge US deficit could pose problems for global financial stability
Fed could exploit helicopter money with digital currency system – former officials
Simon Potter and Julia Coronado propose recession insurance bonds, consumer QE and Fed-backed digital currency as crisis tools
No date in sight for Fed Board nomination vote
Delays in voting on Judy Shelton and Christopher Waller leave board understaffed during crisis
Crisis exposes flaws in US financial stability regime
Former Fed chair Janet Yellen urges Congress to reform US’s financial stability framework, after failure to curb corporate leverage in the lead-up to lockdown
OCC chief resigns immediately after finalising controversial regulation
FDIC abandons support at final hour after facing strong criticism from Democratic senators
Covid-19 biggest threat to Fed mandate ‘in our lifetimes’ – Clarida
Fed may not provide further forward guidance until September, Richard Clarida says
Book notes: Central banking before 1800, by Ulrich Bindseil
A new standard reference point for the history of central banking
FOMC considers more aggressive forward guidance
Officials discussed state-contingent forward guidance and yield curve control, April minutes show