Saturday, 23 February, 2019

Fed Minutes: Balance Sheet Reduction Likely In "Couple Of Months"

Mike Powell  Getty Images Mike Powell Getty Images
Andrew Cummings | 06 July, 2017, 00:51

Inflation, in particular, has proved hard to nudge closer to the Fed's 2 percent target, while in the first three months of the year the economy grew at a rate of only 1.4 percent. Any profit the Fed has at the end of the year must be sent to the U.S. Treasury. The Fed's favored inflation measure, the core personal consumption expenditure index, grew just 1.4 percent at an annualized rate in May, below the rate that the Fed targets. As the Fed raises rates, lenders have lowered borrowing costs, the opposite of the effect intended by the central bank. Some Fed officials suggested at the June meeting that this reflects both the possibility of slower economic growth and the influence of the Fed's own bond holdings. The pace of price increases has slowed in recent months, forcing the Fed to back away from its earlier predictions that this would be the year that inflation approaches the Fed's desired 2 percent annual pace.

Piegza said the Fed wants the market to have the time to digest the plan to reduce its portfolio and also an additional period for monitoring the economic data before committing to a start date.

This could argue against maintaining low interest rates, which could favor "a buildup of risks to financial stability", the minutes said.

In their forecasts, Fed officials have signaled another small rate increase is coming this year, and three more are expected in 2018 until the rate reaches about 2.1%.

Indian police launch probe after woman attacked with acid for 5th time
After the knife attack in 2012, she had again been allegedly attacked with acid in 2013, police officials said . The armed constable responsible for her protection was in the hostel's waiting hall when the incident occurred.

SC Election Officials Receive Voter Data Request
Trump launched the commission in May via an executive order . "For Republican election administrators, this is a federalism issue. A spokesperson for Arizona Secretary of State Michele Reagan told KTAR in an email she has not received the commission's letter.

White House shared the salaries of its staffers
On Friday, White House released its annual report to Congress detailing the names, statuses and salaries of 377 employees. In addition to men being paid more , there are also more of them on the White House payroll: 200 compared to 174 women.

In a press conference following the conclusion of the June meeting, Yellen attributed lower inflation in part to temporary factors, like one-off decreases in the prices for cell phone services and prescription drugs.

"It's very clear that the Fed wants to remain vague", said Lindsey Piegza, chief economist at the financial firm Stifel Fixed Income.

Following the release of Wednesday's minutes, Fed funds futures markets maintained their prediction that the central bank would not increase rates again before December. The economy has now reached a solid enough point that the Fed may look to begin unwinding its holdings at some point this year. It can take a lot of action and not hurt the stock market. The minutes show concern that financial conditions have remained loose even as the Fed's been hiking interest rates.

Several Federal Reserve officials wanted to start reducing the trillions of dollars of assets held by the central bank "within a couple of months" to accelerate the return to a more normal monetary policy after years of battling the Great Recession, according to an account released Wednesday of their most recent meeting.

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