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The Federal Reserve is optimistic about the economy but will keep interest rates steady

The-Web-Tycoon — Thu, 29 Apr 2010 02:36:16 +0000

The Federal Reserve repeated the same speech from last months when keeping interest rates in a historical minimum, between the 0% and the 0.25%, and return to show that is willing to keep it during a “period of time”. The Federal Reserve also noted that in the last month the economy has been getting stronger.

The Federal Reserve hasn’t changed any coma of his habitual speech, at the end of the meeting began yesterday, the Federal reserve decided to keep the price of money steady in his historical minimum one more month. Since December of 2008, the interest rates of the United States remained between 0% and 0.25%.

Furthermore, the Federal Reserve reiterated that interest rates will remain in a low level “during a period of time”, repeating the same words that some are voices are demanding to be suppressed from communicates. However, the members of the open committee of the Federal Reserve are defending that the forecasts point that these measures are necessary to help promote the economic and labor recovery, so as price stabilization.

About the economic Landscape, Bernanke and his team highlighted that continued recovering and pointed that he labor market is beginning to give live signals, when improving respect his last meeting. However, the Federal Reserve reiterated that the recovery will be “provably moderate for a time”, but hopes a gradual improvement of the usage of economic resources.

Low interest rates are braking the Dollar and the Yen

The-Web-Tycoon — Fri, 19 Mar 2010 18:48:14 +0000

Both the Federal Reserve and the Bank of Japan have decided to postpone a increase of interest rates. The answer in the currency market is a brake for the dollar and the Yen, and a higher increase for the most punished currency last months: the pound.

The activity began past Wednesday when the meeting of the Federal Reserve ended. The Federal reserve did not change his speech, and although the weak signals of recovery, is still likely to keep interest rates between 0% and 0.25% during a long period of time.

The other central bank, among the biggest economies in the world, that has gone further with his policy of 0 interest rates, the one of Japan. Isn’t likely to keep this policy too. After his last meeting decided to double his liquidity program for the financial system to surpass $220.000 million.

The cross among the Yen and the Dollar remained steady yesterday, with a growth by 0.06% of the Japanese currency. At the same time, the dollar is paying the fears of inflation. The data about production prices in February was released yesterday with a growth by -0.6%. The analyst’s forecasts estimated this by no more than -0.2%.

The Euro hasn’t been able to take a fair advantage from the situation of the Dollar. The currency has just been able to keep the gains obtained after the aids promised to Greece, and now an Euro has a value of 1.38 Dollars.

The pound is the luckiest currency this week, investors ended to speculate low thanks to the lowest demand of unemployment subsides in the United Kingdom since 1997. The hope of recovery on British Economy o pushes the pound by 0.52% to 1.532 dollars per pound.

The Falcon of the Federal Reserve Warned that Interest Rates Should be Higher

The-Web-Tycoon — Wed, 03 Mar 2010 01:23:22 +0000

Thomas Hoenig, president of the Federal Reserve in Kansas and one of the most pro-increase of interest rates in the Federal Reserve, launched a warning to the market when stating that a long period with ultra low interest rates invites to the speculation and is dangerous. The price of money in the Unites States is between 0% and 0,25% since December of 2008.

“When your interest rate is permanently at 0, you are inviting future problems. We know that the 0 isn’t sustainable…the market knows it”, stated Hoenig.

Furthermore, the regional president of the Federal Reserve, stated that the Central Bank of the United States must be ready to increase interest rates although having high unemployment rates.

Hoenig has been positioned as of the the falcons in the Federal Reserve. He appeared in the act of the last meeting of the Federal Reserve, released on February 17th ; asking for a important change on the Federal Reserve’s official message: instead of saying that the interest rates will be low “during a long period of time” say “at the moment”.

This message arrives after Ben Bernanke, president of the Federal Reserve, stated last Wednesday that the interest rates in the United States would remain low during a long period of time.

Bernanke, tried to change the market that way, after the message by the Federal reserve two weeks before, when announced the increase of discount interest rates: what banks pay when they have an emergency of liquidity.

The Federal Reserve Increased the Discount Interest Rate

The-Web-Tycoon — Sat, 20 Feb 2010 03:01:42 +0000

The Chief economist from the Bank of America in New York, Mickey Levy, believes that the decision adopted by the Federal Reserve two days ago, when increasing the discount interest rate, shows that “the financial crisis ended, in great part”.

In declarations took by Bloomberg, Levy estimates that “it is time to normalize things”, after the Federal Reserve began to trim the interest rates when lending money to the banks in the beginning of the financial crisis at the end of 2007. The economist points that this movement “doesn’t represent too much, because any bank in a situation without crisis will go to the discount office if doesn’t have problems”.

On Thursday, the Federal Reserve increased for first time since June 2006 the discount interest rates given to the banks with need of liquidity to obtain short therm financement by an increase of 0.25% to the rate of 0.75%.

The Federal Reserve will go further

“The Federal Reserve, during the financial crisis, lowered the discount interest rates to increase the liquidity in the system”, highlights Levy. The expert points that “now we must retreat the aids to obtain liquidity, given that we aren’t in the financial crisis”. For that reason, Levy points that “It’s normal the movement to the normality in the difference among the general interest rate and the discount interest rate”.

Levy assured that central banks will increase the federal interest rates “when they be convinced of that the economic recovery is sustainable”. Since December 2008, the interest ratel is in his

lowest level in all the History, among a 0% and a 0.25%

The Job of Ben Bernanke in the Federal Reserve is in Danger

The-Web-Tycoon — Mon, 25 Jan 2010 04:42:40 +0000

The perspectives of keeping his job in the Federal Reserve by Ben Bernanke have been put into doubt last Friday, when the Obama administration was trying to ensure its power in the Senate.

The people against Ben Bernanke, some afraid of his reelection and some disagree with what the Fed done with the financial crisis, moved against him, enlarging the list of negative votes already revealed.

Democrat senators Barbara Boxer (California) and Russ Feingold (Wisconsin) said that will be against the reelection of Ben Bernanke, that should be before the January 31st.

Ben Bernanke needs 60 votes to ensure his reelection, due to the blocking system of the chamber. Donald Kohn, vicepresident of the Federal Reserve, would be the interim chief of the bank is reelection of of Ben Bernanke is postponed.

Other names that circulated as alternatives for the presidency of the Federal Reserve, include Kohn himself, Lawrence Summers, the economic assistant of the president, and Alan Blinder, the economist of the Princeton University.

The assessors of the White House and the Treasure, Rely on that Ben Bernanke will be confirmed by the senate, when will be accomplished five months since the president of the United States announced his nomination.

Before the vote of Harry Reid, democrat leader of the Senate, seemed to be doubting, but said that ‘”Although I will vote for, my support isn’t unconditional”

Some economists warned that rejecting Ben Bernanke could be seen as a threat to the independence of the Federal Reserve. So and the shares falled by 2%.

A “No” to Ben Bernanke could be seen by the markets as a sign of uncertainty. Chris Dodd, the president of the Banking comittee of the Senate, said that a ”No” to Ben Bernanke for answer t would leave the economy in a sharp fall.

The Federal Reserve Closed 2009 With Record Profits

The-Web-Tycoon — Thu, 14 Jan 2010 02:24:11 +0000

The federal reserve closed 2009 with record profits, $46100 million, that the central bank will refund to the treasure.

According the Washington Post , this is the highest profit obtained by the federal reserve in their 96 years of history. The entity presided by Ben Bernanke, surpassed the analyst’s forecasts from the Bank of America, Goldman Sachs and JP Morgan, and has made it thanks to the aggressive bond purchases last year. His previous record was of $34.600 million in 2007.

At the end of 2009, the Federal Reserve was controlling $1800 billion in debt from the US Government. This figure surpasses widely the $497000 million of 2008.

Although closing 2009 with record profits, Diane Swonk, chief economist from Mesirow Financial, warned that these results expose the Federal Reserve to higher risks, “they have elevated the risks curve, given that they have longer therm assets and more issues related with credit risk”,pointed.

So, the Federal Reserve could lose money if the price of Treasure Bonds or these values related with mortgages from Fannie Mae and Freddie Mac decrease during upcoming years and the executives from the Federal Reserve opted for drain liquidity from the system with the sale of assets.

On the other side, the president of the Federal Reserve, Ben Bernanke, obtained a slight improvement in his income for 2010 and his salary will be up to $199.700 without Bonuses.

The Federal Reserve is worried about the inflation, the unemployment and the withdrawal of the emergency packages

The-Web-Tycoon — Fri, 08 Jan 2010 02:21:18 +0000

The Federel reserve is still very worried about the evolvement of labor market and and the risks on a still weak economy of the emergency package withdrawal. Furthermore inside the Federal reserve of Ben Bernanke there is divergence of opinions about how will the pressure affect the inflation rate next months.

This way, the Federal reserve showed that although the last report this November, is worried about the unemployment rate. However the bankers of the Federal Reserve state that they will need more than a good report to confirm the evidence that the labor market is recovering.

The hottest discussion between the officers of the Federal Reserve was about the forecast on inflation rate. So, some members of Federal Reserve’s open committee see low risk on the increase of prices due to the low interest rate, although they recognize that it’s important ”to stay alert” in front of possible risks.

On the other side, some members of the Federal Reserve believe that the increase on prices experimented by some raw materials could boost the inflation, a situation that could lead to higher interest rates although further improvements on the labor market.

The risk of the emergency package withdrawal

On this point of view, a civil servant of the Federal Reserve pointed in the last meeting hold on December, that the improvements of the financial markets and the economy, could ensure the withdrawal of the asset purchases and the sale of these across time. While others, are keeping that the economic recovery is still weak to withdraw the emergency packages and they bet for extend the asset purchase.

The Beige Book of the Federal Reserve, detected that the economy in the United States is getting better

The-Web-Tycoon — Thu, 03 Dec 2009 18:28:01 +0000

The Federal Reserve noted since the last report on October 21^st that the Economic conditions in the United States have improved. At the same time, the Fed featured in the Beige Book that the labor market is continuing weak, but there are some isolated improvements.

The Beige Book records the economic evolution of the 12 zones in the Federal Reserve, this institution, highlighted that in eight regions,they recorded improvements, and in the other four, the situation was remaining more or less steady this last month. The major issue for the Federal Reserve is the labor market.

Yesterday, the private Unemployment data from November was released. During the last month, the companies of the United States destroyed 169000 jobs, more than the expected by the analyst, but less than the month of October, when 195000 jobs where destroyed.

Now that Christmas are very close, The Federal Reserve Recorded a moderate recover of consumption, specially the purchases of cars, this was due to the federal aid to persuade consumers to buy more vehicles.

According the Federal Reserve, Manufactures and Housings are also improving.

Since the last report of the Federal Reserve, the manufactures overlarge part of the country began a moderate improvement from the steady situation they had on the previous month.

This week was released the Manufacturer ISM, what measures the industrial activity in the US, this index fell from the 55.7 points in October, to 53.6 in November. But it is still keeping over 50 points, thing that means growth on the activity.

At the same time, the Beige book highlights that in the residential housing market there are also some improvements from very low levels. During the last weeks, the sales of new and used houses increased more than the expected.

Bernanke said that the Federal Reserve will not raise the interest rates

The-Web-Tycoon — Tue, 24 Nov 2009 19:00:28 +0000

Ben Bernanke, has stated that the federal Reserve follows very closely the evolution of the dollar, after the considerable depreciation this currency suffered in the last weeks against other currencies. However, Bernanke, highlighted that the interest rates will continue low as the economy continues weak and the employment high. Ben Bernanke participated in a talk at the Economic Club of New York, where repeated the same speech about what will do the Federal reserve in the following months.

The president of the Federal Reserve, reiterated that although the economy has returned to the growth, ” the interest rates will continue low during a long period of time”.

In spit of the return to the positive data of the US GDP, the Unemployment is continuing to rise unstoppable, because the economic growth isn’t intense enough to create new jobs. Ben Bernanke remarked that there is still a problem with credit that ”together with the growing unemployment and a weak economy, will postpone the economic recovery”

Ben Bernanke is seeing big challenges for the incoming year, but signaled that ” some notable changes in the economic conditions, will turn the landscape of the monetary policy”. For the next year, Ben Bernanke sees ”a moderate growth, that will not be enough to reduce unemployment”, The current policy of the Federal reserve will be kept during some further months.

”We are watching the dollar from very close”

at the Same time, Ben Bernanke recognized that is worried with the dollar , He also stated that the Federal Reserve is following the value changes of the dollar and will design a policy to ”avoid risks” with the objective of promote employment and stability in prices”.

Ben Bernanke considers that the devaluation of the dollar as a mirror of the increase in prices of raw materials due to the improvement of the global economy.