The Economist (September 18)
“The Federal Reserve’s decision to lower interest rates by half a percentage point, announced on September 18th, is momentous for two reasons. As the first cut by America’s central bank since it lifted rates to quell inflation, it marks the start of a monetary-easing cycle. It also represents a bet by the Fed that inflation will soon be yesterday’s problem and that action is needed to support the labour market.”
Tags: Action, Fed, Inflation, Interest rates, Labour market, Momentous, Monetary-easing cycle, U.S.
Financial Times (September 10)
“Central bankers on both shores of the Atlantic are under pressure from many sides — political circles, financial markets, public opinion — to cut interest rates.” But the European Central Bank (ECB) faces distinctly different circumstances than the Fed or BoE. The ECB has already cut rates to 3.75 per cent, which “is already a solid 1.5 percentage points below” the Fed’s rate and inflation is less controlled. “The ECB has no room to cut rates.” It should “maintain a moderately restrictive stance on monetary policy to make further progress on inflation.”
Tags: 3.75%, BOE, Central bankers, ECB, Fed, Financial markets, Inflation, Interest rates, Monetary policy, Political, Pressure, Public opinion, Restrictive
Reuters (August 24)
The U.S. Federal Reserve “must determine how quickly to get to what they deem a neutral rate, neither depressing nor stimulating economic activity. Investors clearly hope that they prioritize speed.” Chairman Powell has now arrived at “the endgame, when the prospect of success is near at hand but the possibility of failure is at its most dangerous. To save the labor market, the cuts can’t come soon enough.”
Tags: Depressing, Economic activity, Endgame, Failure, Fed, Investors, Labor market, Neutral rate, Powell, Prioritize, Speed, Stimulating, Success, U.S.
Seeking Alpha (August 6)
The “market meltdown” on Monday “isn’t getting any less volatile, with things now moving in the opposite direction. Japan’s Nikkei ended the session up 10% overnight, marking its best session since 2008, following a plunge of 13% on Monday. Much of the volatility is said to have emanated in Japan, where a carry trade based on the yen went sour as the BOJ raised rates during the same week the Fed signaled its intention to cut.”
Tags: 2008, BOJ, Carry trade, Cut, Fed, Japan, Market, Meltdown, Nikkei, Plunge of 13%, Up 10%, Volatile, Yen
Bloomberg (July 28)
“Bond traders who’ve set themselves up for gradual interest-rate cuts starting in September are ramping up side bets in case a sudden slide in the US economy forces the Federal Reserve to be even more aggressive.” A minimum of two quarter-point rate reductions are priced in for the year and “some traders have gone even further with wagers that pay off if central bankers go bold and deliver a half-point cut in mid-September — or start lowering rates sooner.”
Tags: Aggressive, Bond traders, Central bankers, Economy, Fed, Half-point, Interest, Quarter-point, Rate cuts, September, Slide, U.S.
Washington Post (July 9)
The Sahm Rule is considered “the best available recession indicator.” From its nadir, the unemployment rate has risen nearly half a percentage point, which is the rule’s threshold signifying a new recession. “This indicator is flashing a warning sign for the United States. It doesn’t indicate a recession will definitely happen soon, but it is an important wake-up call, and the Federal Reserve needs to pay attention.”
Tags: Attention spans, Fed, Indicator, Nadir, Recession, Sahm Rule, U.S., Unemployment rate, Wake-up call, Warning sign
Washington Post (June 4)
“The European Central Bank on Thursday is almost certain to lower its benchmark interest rate for the first time in nearly five years. The move will come as the Federal Reserve remains on hold with plans to trim U.S. borrowing costs, amid inflation that is proving more stubborn than anticipated.” For the ECB, however, inflation appears to be “less of a problem than the weak growth outlook.”
Tags: Benchmark, Borrowing costs, ECB, Fed, Inflation, Interest rate, Lower, Outlook, Stubborn, U.S., Weak growth
Bloomberg (April 30)
“Regardless of how pragmatic propping up the yen after such a poor run may sound, the question is whether it would be wise…. With US rate sentiments weighing heavily on the yen, an intervention would be no lasting solution in the event of a hawkish Fed pivot.”
Tags: Fed, Hawkish, Intervention, Lasting, Pragmatic, Propping up, Rate, Sentiments, Solution, U.S., Wise, Yen
New York Times (April 12)
“More economists are paring their bets that the Fed will cut rates after the latest Consumer Price Index report.” The new consensus of “higher-for-longer inflation… has hit the U.S. housing market like a thunderbolt. Home prices and mortgage rates are climbing again, dashing hopes that financing costs would fall this year and adding another economic question that could hang over the presidential election campaign.”
Tags: CPI, Economists, Fed, Financing costs, Home prices, Housing market, Inflation, Mortgage rates, Rates, U.S.
New York Times (March 23)
“Investors in the futures market had expected the Fed to cut rates up to six times this year, but have recently come around to the central bank’s view that only three cuts are more likely. It hasn’t seemed to matter for the stock market’s barnstorming rally.”
Tags: Central bank, Fed, Futures, Investors, Rally, Rates, Stock market, Three cuts
