Federal Reserve System
Yellen willing to reassess 2% target
Fed chair says question of the right target level is one of the most important facing central banks today; wind-down of QE likely to be dull, she adds
FOMC votes for hike but stays cautious on outlook
Fed committee votes for second rate hike of 2017, but enthusiasm for further tightening appears to be fading
New US dollar bills will not be polymer – Fed official
US plans to launch a new family of banknotes that will have more intaglio printing; Fed’s Lambert sees a bright future for cash
US Treasury proposals seek to water down Basel III
Proposals include axing parts of liquidity rules, reducing the use of stress testing and the possibility of allowing banks to opt out of the Volcker rule
Yellen told inflation target needs revising
Economists say current economic conditions call for a revision in the inflation target; Federal Reserve should appoint commission to advise on “path forward”
Possible Fed appointments on the horizon
Treasury department official Randall Quarles and former Fed staffer Marvin Goodfriend believed to be on the shortlist; no date yet for appointment announcement
Book notes: Fed Up, by Danielle diMartino Booth
A “fascinating but annoying” account by a US Federal Reserve insider who openly criticises the culture of the US central bank and policy decisions made by the institution leading up to and following the financial crisis
Fed paper warns on helicopter money risks
Tool appears much less powerful when less realistic elements of the New Keynesian framework are removed; other options could work better, authors say
Inflation is preventing interest rates from rising faster, says Powell
Labour market progress points towards a faster pace of normalisation for the Fed, but below-target inflation is preventing rates from rising above the current “gradual pace”
Model risk falls under the CCAR microscope
Fed using qualitative reviews to test the quality of model risk governance
Brainard turns cautious on inflation concerns
Lack of wage growth and lower than expected inflation data could slow further monetary easing, says Fed governor; interest rates are likely to rise “soon”
Deutsche Bank fined further $41 million by Fed
US central bank finds fault with banking giant’s AML function, months after UK regulators imposed similar fines; Deutsche has two months to submit reform plans
Fed minutes shed light on balance sheet shrinkage plan
System of caps would allow gradual reductions in the reinvestment of securities held under the QE programme
Tackling the ‘human agency’ problem
Central banks are readying their communication strategies to mitigate a populist backlash against their post-crisis policies
Kohn worried about weight of expectations on Federal Reserve
The weight of expectations on the US Fed may be too high; the US is not as well placed as the UK to tackle another major crisis, says the former Fed vice-chair
Fed report finds many people left behind by growth
Survey finds nearly a quarter of Americans struggling to pay their bills; problems concentrated in less-educated segments of the population and minority groups
Fed should make sure it does not ‘fall behind’ – Mester
US central bank should “remain vigilant” as employment reaches full capacity and the balance sheet begins to unwind; the Cleveland Fed president sees more rate hikes this year
Former Fed vice-chair Kohn on populism, top central bankers
Donald Kohn speaks to Christopher Jeffery about his fears for the Fed amid mounting populism, why he has few policy regrets and his experiences working with some of the world’s top central bankers
Kashkari: Fed should not seek to deflate asset bubbles
Spotting bubbles is too difficult and the costs of failure too great, the Minneapolis Fed chief warns, although he concedes raising interest rates remains an emergency option
Increasing female participation in workforce will help US growth – Yellen
Fed chair examines barriers women still face when entering the workforce; increasing participation rate could help increase US output by 5%
People: US assembles bank regulation team; Mrva reappointed
US administration begins assembling banking regulation team with OCC appointment; Slovakian board member appointed for fourth term; and more
John Williams backs move to price-level targeting
San Francisco Fed chief says inflation targeting is losing its effectiveness in the face of a very low natural rate
ECB paper studies impact of Fed surprises on other countries
Researchers find similar effects on real economy but differences in financial impacts
The myth of independence
The US Federal Reserve stresses independence from government as central to its ability to fulfil its dual mandate. But much of the academic evidence that independent central banks generate better policy outcomes is fundamentally flawed, argues Thomas…