Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Market
Yellen to set tone for interest-rate language
WASHINGTON (3/18/14)--Today, Janet Yellen leads the first Federal Open Market Committee meeting as chair, and economists are keeping an ear out not only for what she says, but how she says it.
 
The Fed has been linking the interest rate to the unemployment rate, but according to the Jan. 28-29 meeting minutes, the federal policy-making committee is looking to change its forward guidance ( News Now Feb. 20).
 
Now is the time for the Fed to revamp its forward guidance tool, analysts say. With the current near- zero interest rates and a continued drawdown of its monthly asset-bond purchases program, "they've got a little room to unanchor these things," said Lewis Alexander, chief economist, Nomura Holdings Inc. ( MarketWatch March 17).
 
Forward guidance primarily has been a repeated commitment to keep short-term interest rates--0% to 0.25%--as long as or "well past" the unemployment rate of 6.5%.
 
Yellen has indicated she would be comfortable with the move away from the unemployment rate, analysts said. The unemployment rate did not fully capture the health of the labor market, she told the Senate Banking Committee last month, especially considering the drag that severe winter weather has had across all economic indicators.
 
New "holistic" guidance is likely to be "be less specific and more ambiguous and point to a variety of indicators," Jeffrey Cleveland, chief economist, Payden and  Rygel, told MarketWatch .
 
Analysts forecast the fed funds rate will be 0.6% by the end of 2015.
 


RSS





print
News Now LiveWire
16.9% of U.S. homeowners underwater, down from peak 31.4% in 2012, reports @zillow http://t.co/EbILqY1HMz
10 hours ago
Breaking at #NewsNow: President Obama signs IOLTA bill into law. http://t.co/5N741Bygmn
11 hours ago
.@edmunds says the week between Christmas and New Year's is the busiest car shopping time of the year.
12 hours ago
.@CFPB sues Sprint for cramming 3rd-party service fees onto consumers' bills http://t.co/mhlMWqLKku
13 hours ago
#HomeDepot #databreach lawsuits consolidated in Georgia http://t.co/A4bei5z0mV
14 hours ago