Financial Communique » Federal Reserve

Bernanke do not see soon end of unemployment

Viliyana Filipova — Wed, 21 Jul 2010 13:59:01 +0000

The unemployment rate in the U.S. is expected to remain well above 7 percent by the end of 2012 and throughout the term of the current U.S. president Barack Obama. It said Federal Reserve Chairman Ben Bernanke before Congress, said New York Times. He will need time to recover all the 8.5 million jobs, removed during the recession in the U.S. in 2008 and 2009. Ben Bernanke is concerned that the economic outlook and financial conditions in the country remain unusually uncertain, and warns that the fiscal crisis in Europe has become an obstacle to economic growth in recent months. Speaking on the occasion of his presentation was a semi-annual monetary policy report to the Federal Reserve to Congress. Analysts say his tone is become much more cautious than the presentation of the last report in February. Bernanke confirmed in his speech that the economic expansion that began in mid 2009, continues but with lower rates. That contributes significant support from governments and central banks with their common fiscal and monetary policy. He expects that the growing demand of households and businesses will help sustain growth, despite incentives from the government will have less effect.
Bernanke fears of the poor condition of the housing market, which continues to suffer from the large number of free and compulsory stolen property that pulled prices down and reduce the activity in the construction sector. On the inflation head of the U.S. central bank acknowledged that the last two years the trend is to decrease prices, but did not explicitly indicate that fears of deflation. During their last meeting in late June the Federal Reserve lowered its forecast for U.S. economic growth this year to 3% from previous 3.5% and left the base rate of his historically low level of 0.25 percent. For 2011 is projected economic growth of 3.5% to 4.5% and unemployment is expected to drop to 7 to 7.5% at the end of 2012. Bernanke testimony on the economy and monetary policy of the U.S. Federal Reserve came a little after Bush signed a law on the biggest reform in the financial sector of the country by years since the Great Depression.

FED may increase the interest level next months

Viliyana Filipova — Sun, 07 Mar 2010 19:09:27 +0000

The U.S. Federal Reserve will probably raise its main interest within six months, with between a quarter and half percentage points, according to a survey of the National Association of Business Economics (NABE), said. According to the survey, conducted every six months, most of NABE economists find this almost zero interest rate the Fed is appropriate. More and more of them, however, feel that it is too stimulating. “The majority believes that the increase in interest rates over the next six months is as likely and appropriate,” said NABE president Lynn Riyzar. According to the Fed’s high unemployment and low inflation to justify keeping interest rates extremely low for an extended period. The data indicate that the economy has gradually recovered and by some leaders of the Fed Reserve needs to start preparing the markets for the tightening of financial conditions. Economists interviewed by NABE, believe that the suspension of purchases of mortgage securities by the Fed will increase interest rates on mortgage loans with an average of 42 basis points. The program, worth 1.25 trillion. dollars, will be discontinued at the end of the month. 44% of the respondents believe that inadequate regulatory oversight was the main reason for the deep financial crisis, which led the country to a painful recession.
Most of them think that limiting the regulatory functions of the Fed, as proposed by some lawmakers, would make the central bank less efficient in conducting monetary policy. Growing proportion (44%) found fiscal policy to correct, the highest rate since 2007, the majority view, however, that additional financial incentives are not necessary. Almost 80% of economists said that the long-term deficit of the United States could reduce the country’s ability to borrow funds.

Federal Reserve began to withdraw money from the financial system

Viliyana Filipova — Sun, 21 Feb 2010 01:37:51 +0000

The U.S. central bank began tightening cycle of monetary policy. This happened quite a surprise, since no signals were given prior to such intentions. Policy on withdrawal of money from the system began with an increase in the discount rate that commercial banks pay the Fed on its direct loans from the central bank. He was raised by a quarter percentage point to 0,75 percent. Among the reasons the central bank is that commercial banks must rely more heavily on money markets to raise the necessary funds, rather than resorting to the services of the Fed. These changes are considered as a step toward normalization of credit facilities the Fed,” says the official release of the institution. “No change is expected to lead to further tightening in financial conditions for households and businesses and they are not intended to signal a change in the outlook for the economy or monetary policy,” the Fed explained. After news of the dollar shot up sharply since the central bank’s actions are perceived by the market as a signal that is to tighten monetary policy. The dollar jumped to a level of 1,3485 EUR / USD, as at an earlier stage had reached a level of 1,3444 EUR / USD.
This is the highest dollar level since May last year here. Another step taken by the Fed to limit the time within which may be granted loans to commercial banks. The increase in the discount rate is a first for the last three years. An increase in the Fed probably does not greatly increase the base interest rate at their next meeting.

The second mandate of Bernanke is not sure

Viliyana Filipova — Sat, 23 Jan 2010 12:48:39 +0000

Future of Ben Bernanke, who on 31 January to appear in the U.S. Senate to be reelected for a second term in office of President of the U.S. Federal Reserve (Fed), is less certain, says the online edition of the WallStreet Journal. At the end of last week the number of senators who will vote against the increase, incl. and members of the Democratic Party. Fed is subjected to very severe criticism over its policy during the passing decade of this century. According to the Financial Times the charges were for common monetary policy for financial market deregulation, weak control over the banks, which has indeed led to the emergence of the financial crisis. However, many legislators are unhappy with the actions of the U.S. central bank and specifically by Bernanke and himself during the crisis, incl. and rescue of the banking system and specifically the insurance giant AIG, to whom was committed and guaranteed $ 180 billion public money. On Friday, the Democratic Party Senators Barbara Boxer and Ras Feynhold, who are partial elections for their eventual re-election, said they would vote against a second term of Bernanke. “The next chairman must not be associated with a failed financial policies of the recent past,” said Boxer to WallStreet Journal. According to the newspaper, referring to Dow Jones Newswires, for 15 senators have announced that Bernanke will not support (4 Democrats, 10 Republicans and one non-party), 26 senators, however, have announced that they will support it, while 59 does not have publicly announced comment. Bernanke needs 60 votes to get a second term.
The U.S. Senate is the upper chamber of Congress and every state is represented by two senators, a total number 100. Senator’s term of office is 6 years as the biennial election for the renewal of one third of the seats in the Senate. Until last week no doubt that Bernanke will be reelected for a second term but lost the election in Massachusetts by Democrats last week because of what the ruling party lose its constitutional majority of 60 votes. This opened a populist rhetoric and intensify further attacks against the banking system.
The White House declared in defense of Bernanke still five months ago, when President Obama said he wants to be elected for a second term. For this recall and deputy press secretary, White House Bill Burton. He said, quoted by Fianancial Times, that the president has full confidence in Bernanke and the best candidate for this position which has helped the U.S. economy to the precipice of get out. As always in such cases, all looking guru Warren Buffett. Asked by a correspondent for CNBC what would happen if Bernanke is selected, the investor said laconically: “Just tell me why a day earlier to be able to sell a quantity of shares.” According to Christopher Todd, chairman of the Senate Banking Committee, Bernanke if not reelected, the markets will get a bad message and can lead to serious disruption.
The Senate may request the procedure for re-election of this very Bernanke Wednesday, January 27th. However, if he is not reelected to the 31 January to enter into a long procedure, but is now said to be nominated his deputy, Donald Knight.

Bernanke still on the head of FED

Viliyana Filipova — Fri, 04 Dec 2009 07:34:51 +0000

The Federal Reserve Chairman Ben Bernanke defended his post and taken steps under his leadership from the central bank in the U.S. to fight economic and financial crisis. Bernanke made the statement before the Senate, which must consider his candidacy for a second four-year term until the end of December. Under his leadership, the Federal Reserve cut the key rate in the United States to levels close to zero and set aside 3 trillion. dollars to strengthen the financial system. Bernanke warned that lower interest rates can not be changed prior to the careful analysis and assessment of the economic situation. He added that the Federal Reserve will implement the strategy of tightening monetary policy in such a way as to encourage job creation and to maintain price stability in the country. Some of the MPs in the Senate believe that the reelection of Bernanke will become the right message to the financial markets. Others, however, vehemently criticized the measures taken by the Federal Reserve steps forward BBC. Ben Bernanke’s mandate expires at the end of January. U.S. President Barack Obama nominated him for another term as chairman of the Central Bank of the United States in August, but his reappointment must be confirmed by the Senate.
Together with the Treasury of the U.S. Federal Reserve has developed in the autumn of last year’s plan to rescue the financial system worth $ 700 billion. Both chambers of the Senate of the United States insist on reducing the powers of the Federal Reserve. They want and audit of central bank decisions on interest rates and a reduction of its regulatory powers over private banks.

Richard Bouv: Big banks in the U.S. will have to raise money for emergency

Viliyana Filipova — Tue, 01 Dec 2009 04:25:55 +0000

Most large U.S. banks will soon have to take public offerings if the Treasury require repayment of funds lent to them by the program to buy troubled assets (TARP), Reuters said banking analyst Richard Bouv. Earlier this month asked the Federal Reserve Banks, subject to “stress test” to come forward with plans to repay the amounts allocated in exchange for the issued preference shares in them. “In fact, all banks can easily redeem these securities of its cash balances, but only 3 of the top 30 banks would be left with adequate Tier if they do,” explains Bouv. It is believed that the Treasury aims ratio Tier assets to 12 percent, which means that banks will be forced to raise capital without government assistance before they are allowed to repay the funds under the program continues Bouv. “It stirs the thought that some banks would rather have public offerings, although their profits are in doubt.” Rochdale Securities analyst said that the swell of the U.S. budget deficit, which is expected to reach 9.5 percent of GDP in this fiscal year and the drop-down dollar, forcing the government to obtain funds where possible. Collection of funds awarded through the TARP program is one of the possible sources, according Bouv. Many banks want to return the funds received under the program, which was worth 700 billion dollars as participation in it is associated with restrictions on expenditure on salaries, dividends and redemptions.
From the Finance Ministry said on November 19 that it will tender the warrants (rights to purchase securities knzha) who received three major banks in exchange for their allocated budget funds the program through TARP.