Economy

Time is now for Fed to boost security holdings, Powell says

Time is now for Fed to boost security holdings, Powell says”

While the Fed relies on economic statistics to determine its policy steps, Mr Powell noted that revised data showed recent U.S. job creation was significantly weaker than previously reported.

"My colleagues and I will soon announce measures to add to the supply of reserves over time", he said in the text of a speech that was to be delivered Tuesday to the National Assn. of Business Economics in Denver.

The Fed has shifted its stance since late past year, cutting the federal funds rate by 50 basis points at its last two meetings.

According to an Associated Press report, Powell used a Salt Lake City appearance at the premiere of a documentary about former Federal Reserve Chairman Marriner Eccles. Powell did not mention President Trump by name, nor did he refer to the series of often-insulting tweets that the President aimed at him and the other Fed officers. Three-month bill yields fell on the comments.

"Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect" interest rate policy, Powell said.

The Fed has reduced its benchmark rate twice in 2019 and is expected to approve a third cut late this month.

Traders of short-term interest-rate futures are now pricing in more than an 80% chance of a third interest rate cut this year when the Fed next meets, October 29-30.

The move is a tacit admission by the chairman that the Fed let the level of cash reserves fall too low.

"Looking ahead, policy is not on a preset course", he said. "The next FOMC meeting is several weeks away, and we will be carefully monitoring incoming information".

As Powell has stated before the USA economic outlook is favorable, but there are risks to that outlook, mostly from global developments.

Federal Reserve Chairman Jerome Powell said Tuesday that USA job growth since early a year ago was not as robust as thought, a hint that the Fed may be ready to keep cutting interest rates to support the economy.

Powell also acknowledged that the Fed now recognizes that the unemployment rate can fall lower than it previously thought without sparking high inflation.

"Thus, the now reported job gains of 157,000 per month on average over the past three months may well be revised somewhat lower", he said.

Money markets were roiled last month as a combination of corporate tax payments and the settlement of Treasury debt purchases temporarily sent short-term interest rates skyrocketing.

Some current and former Fed officials think the easiest fix to recent funding market pressures would be to build a "buffer" of reserves $150 billion or $250 billion above mid-September's low watermark by buying Treasury securities.

"As we indicated in our March statement on balance sheet normalization, at some point, we will begin increasing our securities holdings to maintain an appropriate level of reserves", Powell said.

A jump in gas prices probably can be absorbed and likely would have little overall impact, he said. "That time is now upon us".



Like this

loading...
loading...

Latest


09 October 2019
Strict enforcement: Europeans urge strict sanctions enforcement on North Korea
Safety Council resolutions" banning ballistic missile assessments. "It is vital that the Security Council upholds its resolutions. North Korean ambassador to the United Nations Kim Song speaks during a news conference in New York, Oct 7, 2019.

09 October 2019
Two people killed in shooting near synagogue in Germany
One suspect has been arrested, police said, though it was not immediately clear how many assailants were involved. Several shots were fired and the suspected assailants then fled in a auto , police said in a tweet.

09 October 2019
Sanders returns home but will 'change the nature of campaign'
A week ago Sanders' presidential campaign announced he'd had two stents put in to fix blockages in his heart. Sanders experienced chest discomfort during an event last Tuesday for which he sought medical evaluation for.

09 October 2019
Ecuador’s president fled the capital and called a state emergency - what’s happening?
On Tuesday, his government said it would be open to mediation by the United Nation or the Catholic Church to overcome the crisis. Eliminating the subsidies is part of the measures created to lower the fiscal deficit, Ecuadorian President Lenin Moreno said.

09 October 2019
Not abandoning the Kurds, says Trump
Turkey has been fighting a Kurdish insurgency led by the PKK, in which an estimated 40,000 people have died, since 1984. On Monday, Trump defended the decision, Haaretz reported , saying that USA support for Syrian Kurds was too costly.

09 October 2019
Angelina Jolie Pushed To Develop Maleficent's Surprise Relationship In The Sequel
Maleficent: Mistress of Evil is set to fly into cinemas on October 18, 2019. Jolie was seen with her kids and co-star Michelle Pfeiffer .

09 October 2019
Advance polls for federal election open Friday
On Election Day, supervisors will show up at their stations at 5 a.m., with poll workers following no later than 6 a.m. Voting at an Elections Canada office is different than voting on election day or advance polling days.

09 October 2019
NASA found a weirdly salty 'ancient oasis' on Mars
The study showed that Earth's cousin not only had river and lake systems but also vast oceans covering its northern hemisphere. Over the aeons, the wind carved out a broad hill which has been named Mount Keen, which Curiosity is now mountaineering up.

09 October 2019
Domino's sticking to growth plan despite sales pressures
He also said that the company's fortressing strategy will continue to put pressure on same-store sales in the coming years. But there was sales growth, including 1.7% company-owned same-store sales and 2.5% in franchise same store sales.

09 October 2019
Is City Girls’ JT Out of Jail?
On Tuesday (Oct. 8), the expecting mom hopped on her Instagram page to announce that her partner-in-rhyme is finally home. Earlier this year, reports claimed that JT would be released March 2020 after beginning her sentence in June 2018.