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Entries in Federal Reserve (106)

Friday
Aug312012

Fed Remarks Help US Stocks to Third Monthly Gain

Hemera/Thinkstock(NEW YORK) -- The markets head into the long Labor Day weekend recovering some of their losses from Thursday. A statement by Federal Reserve chairman Ben Bernanke likely gave the indexes a boost to end the week.
 
Advancing for the third straight month, the Dow closed up 90 points at 13,090.84 on Friday. The Nasdaq gained 18 points to close at 3,066.96, and the S&P jumped 7.1 points to 1,406.58.

The markets will be closed on Monday and reopen on Tuesday.
 
Bernanke says the central bank can do more to help the economy.  He told a Fed conference in Jackson Hole, Wyo. Friday that continued high unemployment and a slow economic recovery are becoming more unacceptable and that the Fed "will provide additional policy accommodation as needed."

Copyright 2012 ABC News Radio

Friday
Aug312012

Bernanke Says Fed May Boost Economy

Mark Wilson/Getty Images)(NEW YORK) -- Chairman Ben Bernanke defended the Federal Reserve’s past stimulus actions in a speech on Friday morning, saying its actions “can be effective” and more of them may be on the way.

Bernanke’s keynote speech at the Federal Reserve of Kansas City’s Economic Symposium in Jackson Hole, Wyo. was closely watched by investors for clues of additional stimulus in the form of quantitative easing, which at its simplest level aims to increase the monetary supply after the central bank buys government securities.

Though Bernanke did not announce any new Federal Reserve policies or strategies, he made clear the central bank would be open to additional action in the future.

With interest rates, in particular the federal funds rate, near zero, many critics of the Federal Reserve say there is little it can do to further stimulate the economy.

“The key with Fed policy right now lies in preventing deflation, but the markets have already backed Bernanke into a corner, in that not executing QE3 will increase deflationary risk,” said Guy LeBas, chief fixed income strategist with Janney Capital Markets.

In his speech, however, Bernanke said, “a balanced reading of the evidence supports the conclusion that central bank securities purchases have provided meaningful support to the economic recovery while mitigating deflationary risks.”

Bernanke also looked back at the financial crisis, saying, “Now, with several years of experience with nontraditional policies both in the United States and in other advanced economies, we know more about how such policies work.”

Bernanke said without the policies of the Fed, “the 2007-09 recession would have been deeper and the current recovery would have been slower than has actually occurred.”

Whether or not investors were pleased with his speech, the markets seemed to respond positively.

The Dow Jones Industrial Average rose 0.46 percent to 13,060 in mid-day trading. The Nasdaq was up 0.3 percent to 3,058 and the S&P 500 was up 0.29 percent to 1,403.

Copyright 2012 ABC News Radio

Thursday
Aug232012

Fed Hints More Action Coming in the Near Future

Mark Wilson/Getty Images(WASHINGTON) -- The financial world has Aug. 31 circled on its calendar as the day the Federal Reserve might finally get around to announcing more action in an effort to jumpstart the still foundering economy.

The tip-off came Wednesday as minutes from the Federal Open Market Committee stated, "Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery."

Federal Reserve Chairman Ben Bernanke is scheduled to speak a week from Friday at an economic summit in Wyoming.  It's a speech that could reveal what the nation's central bank has in mind for its September meeting.

If the Fed does make a move, it'll likely be a third round of bond buying -- called quantitative easing -- which would help to stimulate the economy.

Bernanke and the Fed have held off for now, hoping that record-low interest rates would spur banks to lend more.  But that hasn't really been the case.

Meanwhile, Republicans on Capitol Hill want the Fed not to do anything more until at least after November because of the repercussions action might have on the volatile election season.

Copyright 2012 ABC News Radio

Tuesday
Aug072012

Bernanke Says Europe Needs Its Own Fed

Chip Somodevilla/Getty Images(WASHINGTON) -- Federal Reserve Chairman Ben Bernanke says that a central economic organization in Europe would help solve some of that continent’s economic crises.

“If Europe had a single fiscal authority, that would put them in a much closer situation relative to the United States,” Bernanke said Tuesday. “That would probably address many of the concerns, many of the problems that they had.”

European leaders promised this summer the creation of such an organization, but even optimistic outlooks say its creation could take months or years. Even then, critics fear that like many European Union organizations it may not have the teeth to police its member states.

Speaking during a townhall to public educators in Washington, D.C., Bernanke admitted “getting to that point is very difficult.”

“You have 17 different countries,” he said. “Each set of taxpayers want to make sure that their own country is being fairly treated.”

Turning his attention to the future, the Fed chairman also said newer regulatory measures including the Dodd-Frank Act and the Basel, Switzerland, accords were needed to prevent crises over the horizon.

The Dodd-Frank bill imposed new financial regulations on the nation’s financial services industry intended to prevent another massive bailout. The Basel Accords are an international agreement on standardized risk  based capital requirements for banks.

Bernanke credited Dodd-Frank with providing shared infrastructure across U.S. government agencies to “to take steps to provide a warning” against possible downturns.

At the international scale, Bernanke extolled the Basel accords for mandating increased reserve capital requirements across the largest banks. The measure, he said, was designed to make the financial system “as resilient as possible” by giving banks a larger cushion with which to sustain losses.

On Capitol Hill Tuesday, some lawmakers are saying Basel didn’t go far enough. Bloomberg News reports Sens. David Vitter, R-La., and Sherrod Brown D-Ohio, have asked the Fed to implement a surcharge with Basel, “significant enough to change the incentives for the largest banks.”

Copyright 2012 ABC News Radio

Wednesday
Aug012012

Stocks Close Lower as Fed Delays Action on Economy

iStockphoto/Thinkstock(NEW YORK) -- The Federal Reserve's decision not to take immediate action to stimulate the economy helped drive stocks lower Wednesday.

The Dow closed at 12,976, a loss of 33 points. The Nasdaq lost 19 points, falling to 2,920, while the S&P gave up four points at 1375 as trading drew to a close.

While the Federal Reserve acknowledges that the economy has slowed since the beginning of the year, the Central Bank said Wednesday after its latest two-day policy meeting that it will refrain from taking new steps to help spur economic growth -- at least for now. There had been some hope on Wall Street that the Fed would be more proactive, most likely by buying more government bonds.  Any actions taken by the Federal Reserve before its next meeting in September will depend on a combination of further decline in economic activity and the outcome of a meeting by the Fed's European counterpart.  

Results at the conclusion of the European Central Bank's meeting on Thursday may have a larger impact on U.S. markets than Wednesday's Fed decision.  The global markets rallied last week when ECB president Mario Draghi said that he would do "whatever it takes" to protect the euro.

Copyright 2012 ABC News Radio

Wednesday
Jul252012

House Passes Ron Paul's Bill to Audit Federal Reserve

Alex Wong/Getty Images(WASHINGTON) -- In a bipartisan vote, the House of Representatives today passed a bill to require a full audit of the Federal Reserve by the end of the year, examining its monetary policy decisions over the Fed’s management of trillions of taxpayer dollars.

Texas Congressman Ron Paul, the author of the bill, called the vote “a good first step” and urged the Senate to follow the House’s lead.

“It has been a long, hard fight, but Congress finally is getting serious about exercising its oversight responsibility over the Federal Reserve,” Paul, R-Texas, said after the vote. “Auditing the Fed is a common sense issue supported by the overwhelming majority of the American people.  The Fed’s trillions of dollars worth of asset purchases and its ongoing support of foreign central banks cannot be allowed to continue without Congressional oversight.”

The vote passed 327-98, successfully achieving a two-thirds majority. Eighty-nine Democrats, nearly half of the caucus, voted with nearly all Republicans in support of the measure. One Republican, Rep. Mike Turner of New York, voted with 97 Democrats in opposition.

“The Federal Reserve lent out $16 trillion dollars during the financial crisis—that is larger than the entire U.S. economy, or worse, our staggering federal debt. Congress holds the purse, but is currently prohibited from looking into where all this money went,” Kansas Republican Rep. Lynn Jenkins, a co-sponsor of the bill, wrote in a statement. “It’s our responsibility to understand how the Fed manages these funds, particularly when it comes to monetary policy. Monetary policy affects every single American through inflation and changes in interest rates, both of which can have a direct impact on economic growth and unemployment.”

While some Democrats warned that the legislation could politicize decisions at the non-partisan Federal Reserve, Rep. Dennis Kucinich, D-Ohio, called the vote a “milestone for those of us who have worked for years to demand transparency and accountability.” He urged the Democrat-controlled Senate to quickly pass the bill, although Senate Majority Leader Harry Reid has indicated he does not intend to bring the bill to the Senate floor for consideration.

“Despite mismanagement and secrecy which has benefited the world’s largest banks at the expense of the people, today the House of Representatives finally called for a thorough accounting of the Fed,” Kucinich said. “As more and more Americans learn about the Fed’s shadowy actions, the Senate will find it impossible to stand in the way of the demands of the American people. Transparency and accountability are coming to the Federal Reserve. After today’s vote, it’s only a matter of time.”

Copyright 2012 ABC News Radio

Wednesday
Jul252012

Federal Reserve Closer to Providing More Stimulus?

Chip Somodevilla/Getty Images(NEW YORK) -- The Federal Reserve may be getting ready to pounce. 

Published reports say top officials are moving closer to taking new steps to boost economic growth.  This may include expanding the Fed's holdings of mortgage-backed securities, according to The New York Times.

A new round of quantitative easing -- the first since 2010 -- is expected to be discussed when the Fed’s policy-making committee meets next week.  Both the Times and Wall Street Journal say some members want immediate action, while others favor delaying the decision at least until September.

Interest rates are already at record lows.  The 10-year Treasury note, a benchmark for fixed rate mortgages, is now at 1.4 percent.

Copyright 2012 ABC News Radio

Thursday
Jul192012

Ben Bernanke: Same Economic Analysis, Different Day

Chip Somodevilla/Getty Images(WASHINGTON) -- The appearance by Federal Reserve Chairman Ben Bernanke Wednesday before the House Financial Services Committee went pretty much the same as Tuesday's testimony before a Senate panel.

Bernanke didn't deviate from his contention that high unemployment is keeping the economy from expanding and that the Fed might take some action, but he again wasn't specific about what steps might be taken or when they might happen.

Just like Tuesday, Bernanke also raised red flags that the economy was headed towards a "fiscal cliff" if Congress doesn't move to extend Bush-era tax breaks and stop drastic spending reductions.

Otherwise, the Fed chief said another recession was possible, throwing even more Americans out of work.

About the only difference during Wednesday's appearance was Texas Congressman Ron Paul again pushing a bill that would allow Congress to audit the Fed's monetary policy decisions, an action that Bernanke described as a "nightmare scenario."

He noted, "There's a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term."

Paul has long called for eliminating the Fed, alleging, "Trillions and trillions of dollars (are) being printed out of thin air."

Copyright 2012 ABC News Radio

Tuesday
Jul172012

Ben Bernanke to Testify Before Congress on Economy

Andrew Harrer/Bloomberg via Getty Images(WASHINGTON) -- Americans can expect to see some political theater on Tuesday when Ben Bernanke testifies before members of the Senate Banking Committee. 

The Federal Reserve Board Chairman is set to deliver his view of the slowing economic growth. 

Democratic Sen. Charles Schumer of New York is expected to press Bernanke to take more steps to jolt the economy.  Other Democrats may join in the chorus, while Republicans are highly skeptical about further moves.

Investors are hoping Bernanke will hint that more bond purchases are on the horizon.  In the past, the purchases have led to boosts in the stock market.

Copyright 2012 ABC News Radio

Monday
Jul092012

Fed Report Shows Consumer Credit Growth in May

Justin Sullivan/Getty Images(WASHINGTON) -- A Federal Reserve report out Monday showed that Americans spent more on credit cards in May, the highest monthly gain in four years. Consumer credit climbed to $2.6 trillion, a more than $17 billion increase, according to the report.  

During the month of May, the report says non-revolving credit, including student loans and auto financing, grew by a seasonally adjusted $9 billion to $1.7 trillion. Revolving credit ballooned by $ 8 billion to $870 billion.

With the economy still floundering, the increase in reliance on plastic is likely also the result of the slowdown -- there are not enough wages to cover expenses.

Stuart Hoffman, chief economist at PNC Financial Services Group, says the report may be the result of student loan debt and not much of an indicator of consumer spending in general. According to the report, student lending appeared to be a major driver for overall credit growth -- up $6.2 billion in May to $464.9 billion.

"This report today shows a little more borrowing, but you now put that in a bigger context with consumers you're still not seeing a lot of job growth and still being cautious. I don't think this represents any kind of a big upside for consumer spending," he says.

Hoffman adds the increases don't seem that large when one considers that, "a lot of students are still borrowing to be able to go to college."

Copyright 2012 ABC News Radio







ABC News Radio