Monday, December 29, 2014

Market ignoring Janet Yellen's possible rate hike in 2015

With the economy growing and Fed Chair Janet Yellen poised to raise interest rates, calls for higher yields are the most aggressive since 2009, when U.S. debt securities suffered record losses, according to data compiled by Bloomberg.

Next year should be the break-out year finally,” a financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd., said. “The market is ignoring the rhetoric that Yellen and the FOMC is getting closer and closer to tightening. The market has it wrong.”

Monday, December 22, 2014

Interest rate hike might not happen in 2015

Last week, the Federal Reserve made its last monetary policy announcement of the year, removing the phrase "considerable time" and replacing this with "patient."

Regarding the labor market, Janet Yellen said that overall the labor market has improved, and noted that underutilization of labor resources continuing to diminish. 

On the broader economy, Yellen said that real GDP expanded 2.5% over the four quarters ending in the third quarter, with indications showing the economy continues to grow at that pace. 

Yellen noted that the decline in oil prices "will likely hold down overall inflation in the near term." Yellen added that "as oil price declines and other transitory factors dissipate" the Fed expects inflation to move back towards its 2% target.

The Fed has noted the decline in the "market based" measures of inflation — i.e. breakevens — and said these too look transitory, though these do bear close watching. 

Yellen said that the Committee expects it will be appropriate to maintain its current policy stance "for at least the next couple of meetings."

Yellen said that most FOMC members, however, believe that it will be appropriate to begin raising rates at some time in 2015, but that the time of year depends on the economic situation.

At the time of lift off, FOMC members expect to see a further decline in the unemployment rate, with "core" inflation running near current levels, but remain confident that inflation will run back to target levels.

Yellen still maintains the view that interest rate hikes will continue to depend on incoming data.

"Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."

Thursday, December 18, 2014

Unlikely for rate increase until mid 2015

Federal Reserve Chairwoman Janet Yellen recently ruled out an increase in interest rates until April 2015 at the earliest.

Yellen said Fed policy makers thought it was “unlikely” the economy would show enough vigor to justify the first rate increase since 2006 “for at least the next couple of meetings.”

Asked how many meetings equals a couple, Yellen was emphatic: two.

The Fed’s next meeting is in late January. After that, the Fed does not meet again until March 17-18.

The third meeting of the year takes place April 28-29, with another strategy session in June.

Of course, the Fed could always rates earlier if the economy grows strong enough. But it appears the central bank really is prepared to be “patient” as its latest statement suggests.

And once the Fed does begin to raise rates, Yellen and her colleagues think they will move a bit slower than they previously expected.

Monday, December 1, 2014

Janet Yellen expecting to face more political pressure next year

As Federal Reserve Chair Janet Yellen begins the delicate process of deciding when and how to raise interest rates without stifling the economy, she is facing sharp new pressures from both sides of the congressional aisle. Republican leaders say they plan to use their new dominance on both sides of Capitol Hill next year to target the Fed for much greater scrutiny, including aggressive hearings and possible passage of bills to drag the central bank’s secretive policymaking process out into the open.

“Their new aggressiveness is increasingly alarming to current and former Fed officials, who say they are concerned about the institution’s historic independence from political pressure, particularly at a time of persistent dysfunction in fiscal policymaking on Capitol Hill.

All of this pressure will come as Yellen, in her first full year in the job, attempts to shift Fed policy away from crisis mode without wrecking the global economy. Moving too aggressively to raise interest rates could drive the country back into recession, while moving too slowly risks a disastrous spike in inflation.

“‘She faces the enormous risk of being the one who has to say ‘Well, I’m sorry, we did what we thought was best, but the economy went to hell in a handbasket, anyway,’; said Bob Eisenbeis, chief monetary economist at Cumberland Advisors. ‘And she will face pretty much constant harassment from politicians on all sides.’ This harassment — defenders would call it robust oversight — will come largely from Republicans who believe they have a mandate to expose the inner workings of one of the world’s most important economic decision-making bodies.

Monday, November 17, 2014

Dec 16-17 is the final Fed meeting for this year

The final Fed meeting of the year is scheduled for Dec. 16 and Dec. 17, 2014 followed by a summary of economic projections and a news conference with central bank chair Janet Yellen. 

Meanwhile, the Fed is hosting a meeting Monday with banks and regulators to discuss the development of a reference rate alternative to Libor, the London interbank rate that was at the center of a global rigging scandal.

Tuesday, November 11, 2014

Janet Yellen asks central bankers to fix their economies

U.S. Federal Reserve Chair Janet Yellen on Friday called on politicians across the globe to get their fiscal houses in order during good times to prop up economies during times of turmoil.

While speaking in Paris, France- Janet Yellen blamed part of the slow global economic recovery on weak government support.

She took aim at both U.S. political gridlock after the 2007-2009 financial crisis and the austere policies across Europe as the region struggles with persistently low inflation.

The crisis led major central banks to deploy unconventional tools to spur recovery. For its part, the Fed cut interest rates to zero and more than quadrupled its balance sheet to $4.4 trillion through three rounds of bond buying, eliciting howls of protest from some politicians who feared the monetary largesse would spark an unwanted inflation. It announced an end to its latest asset purchase program just last week.

While the unconventional tools helped support domestic recovery and global economic growth, more action from fiscal authorities would have strengthened the recovery, Yellen said.

"In the United States, fiscal policy has been much less supportive relative to previous recoveries," she said during a panel discussion at the Bank of France.

Yellen cited data that compared the large increase in U.S. government payrolls after the 2001 recession to the decline of 650,000 government jobs after 2008.

AS central banks seek to promote healthy economies, she said a sharpened focus on financial stability would play a key role.

Yellen did not comment on U.S. monetary policy, specifically, but said central banks globally would need to normalize policy as economic activity and inflation return to normal.

The timing and speed of policy normalization will vary across countries, Yellen added, and could lead to financial volatility.

Tuesday, November 4, 2014

Janet Yellen meets Obama for first meeting

President Barack Obama and Federal Reserve Chair Janet Yellen discussed the outlook for the U.S. and global economies and the implementation of Wall Street reforms during an Oval Office meeting on Monday, the White House said.

It was the first one-on-one meeting between Obama and Yellen since she took the helm of the central bank, which sets the nation's monetary policy but operates independently from the White House.

The Federal Reserve and other financial regulators are still finalizing rules from the 2010 Dodd-Frank Wall Street reform act, which aimed to strengthen the financial system after the 2007-2009 credit crisis shattered confidence throughout global markets.

Obama and Yellen talked about the near- and long-term outlook for the economy in the United States and around the world, the White House said. They also discussed the Consumer Protection Act. 

Monday, October 20, 2014

Janet Yellen sounds alarm on income inequality

The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority.

The extent and continuing increase in inequality in the United States greatly concern me. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.

Monday, September 15, 2014

Yellen to hold press conference on Wednesday

 Odds favor a  spike in stock prices this week if the Fed Chief Janet Yellen implies that interest rates won’t edge up until Q2 next year or later when she holds her press conference Wednesday at 2:30.

Nevertheless, the potential for a sharp correction in coming weeks increases as uncertainties mount here and abroad to keep buyers on the sidelines and prompt others to sell.

We have seen worse negatives in recent years, but not with the market at these levels. While this bull market can run much further, the market has not seen a correction greater than 10% in three years.

From what I read, there is no shortage on the Street of those who expect a correction, but I haven’t seen many who see one in excess of 10%, just the 3%-5% variety. But small corrections can become much bigger if new negatives hit the market at the point the small correction is poised for a rebound.   

Monday, September 1, 2014

Janet Yellen net worth rises

Fed Chair Janet Yellen’s assets were valued at $5.3 million to $14.1 million last year compared with a range of $4.8 million to $13.2 million in 2012, according to financial disclosure documents released today. The assets are listed in ranges, so determining a precise valuation isn’t possible from the documents.

Yellen and her husband, Nobel laureate economist George Akerlof, reported a mix of investments, with individual stock holdings in companies such as Houston-based ConocoPhillips, the third-largest U.S. energy company, and a variety of mutual funds.

Low interest rates have punished savers, pushing them into higher-yielding, riskier investments. The Fed chair also had a stake in the Vanguard High Yield Corporate Fund, which invests in high-yielding corporate debt. Yellen also has investments in savings plans at the University of California, Berkeley, where she was a professor.

Her disclosures again noted that she has a stamp collection valued at $15,001 to $50,000, unchanged from the range in previous filings.

Tuesday, August 19, 2014

Janet Yellen to deliver speech from Jackson Hole 2014

Federal Reserve Chairwoman Janet Yellen will deliver a simple message from Jackson Hole this week: Don’t be fooled by the sharp drop in the unemployment rate.

Economists expect Yellen to give a master-class explaining why she believes there is still a lot of slack in the job market. Yellen is likely to review her dashboard, a set of statistics she highlighted earlier this year.

Wednesday, July 23, 2014

Janet Yellen spooks the market after bubble word

Janet Yellen, last week released a biannual policy report just as Yellen, the Fed’s chair, began testifying to Congress on the state of the U.S. economic recovery, the outlook for inflation and what’s happening in financial markets these days.

What Yellen had to say on the last of those factors sent many folks into a tizzy. The Fed views valuations in some parts of the market — especially for smaller social media companies and biotech stocks — as being “substantially stretched,” even after a “notable downturn in equity prices for such firms early in the year.”

In other words, in spite of all of Yellen’s reassuring words to the contrary in recent months, there may be some kind of asset bubble taking shape in at least some corners of the financial market.

The last time that a Fed chairman stuck his head out like this was way back in December 1996, and it ended badly — very badly — for all concerned. Alan Greenspan was Fed head at the time, and his questioning about our inability to know when “irrational exuberance” inflated asset values to levels beyond which they could be sustained by fundamentals triggered a prompt and panicky selloff in stocks. Within months, however, the Dow Jones Industrial Average was setting a string of new records and Greenspan was left with egg on his face.

Greenspan wasn’t wrong, of course. The kind of “unexpected and prolonged contractions” he envisaged in his 1996 speech did show up — but not until early 2000, by which time the Dow had climbed 81 percent. Anyone who had listened to his warnings had forfeited a lot of money.

Burned by that experience, Greenspan never again spoke out to warn the public about bubbles taking shape in the economy or financial markets during his tenure at the Fed.

Read More at:

Monday, July 21, 2014

Yellen unsure why Housing market is sluggish

I have to say that I'm somewhat surprised. Frankly, it [housing market] continues to be sluggish. And I can't give you a precise reason why that's occurred.

Monday, July 7, 2014

Mohamed A. El-Erian on Janet Yellen

Over the weekend, I reread remarks that U.S. Federal Reserve chair Janet Yellen made last week at the International Monetary Fund and also read the transcript of her conversation with Christine Lagarde, the International Monetary Fund's managing director.

The IMF event brought together a virtual who’s who of the international economic and financial community, and in one of her most significant policy speeches to date, Yellen seized the opportunity to address head-on some of the major questions confronting modern central bankers. Many of these center around the burden of trying to restore, almost single-handedly, economic growth, more dynamic job creation, price stability, and durable market stability.

There are seven major takeaways from Yellen's IMF speech. They collectively signal that the Fed will maintain a gradual policy approach for now. Markets, conditioned to expect strong and steadfast monetary support from the Fed, welcome that stance. But Yellen's statements also point to the need for a delicate transition from policy-induced growth to more organic economic growth. If that transition is mishandled, it would trigger renewed financial and economic instability.

First, Yellen recognizes that we could well be in a world of steady-state interest rates that, in both nominal and inflation-adjusted terms, are lower than what historical experience would suggest.

Second, such rates, as Yellen noted, can “heighten the incentives of financial market participants to reach for yield and take on risk.” Indeed, she added, “such risk-taking can go too far, thereby contributing to fragility in the financial system.”

Third, financial stability cannot be divorced from the pursuit of economic well-being, because “a smoothly operating financial system promotes the efficient allocation of saving and investment, facilitating economic growth and employment.”

Fourth, this situation places even greater importance on the effectiveness of macro-prudential policies as “the main line of defense” against financial excess in the marketplace.

Fifth, while progress has been made in strengthening crisis prevention through better macro-prudential measures, more is needed at the policy level. With that in mind, Yellen stated that she “has not taken monetary policy totally off the table as a measure to be used when financial excesses are developing." Since macro-prudential tools "have their limitations,” monetary policy should be "actively in the mix” even though it is “not a first line of defense.”

Sixth, central banks have to continue to think imaginatively about additional tools they can deploy to bolster the economy and maintain financial stability given the constraints they face in using interest rates as an effective macroeconomic tool.

Finally, Yellen noted that it would help if other global policymakers also pursued reforms needed to unleash the productive power of Western economies.

Yellen's important statements last week confirm that the Fed will maintain its current gradual policy approach: namely, tolerating financial excesses in the hope that that will ultimately lead to more dynamic economic growth. As such, the Fed will continue to brush aside the risk of future financial instability in favor of near-term economic gains when it thinks about interest rates and issues policy guidelines.

Investors, however, shouldn't think that Yellen's comments represent a permanent state of affairs at the Fed. The institution is already well aware of bubble-like conditions in certain financial markets and it recognizes that there is only so much macro-prudential regulations can do to limit systemic risk.

All of this reminds me of an important observation that Jeremy Stein, a former Fed governor, made in a May speech at New York University about the current policy paradigm, one with which the Fed is wrestling and markets would be well advised to keep on their radar screens too.

Stein pointed out that current Fed gradualism has married effectively with investor expectations to produce low volatility in financial markets. That will remain a happy marriage only if it leads to solid economic growth and doesn't throw off the collateral economic damage that excessive risk-taking can entail.

Monday, June 30, 2014

Janet Yellen moves to new home

Janet Yellen lives in Hillandale, an exclusive gated D.C. community where house prices exceed $3 million. The Journal says the community is governed by “50 pages of rules banning fences, motorcycles, certain paint colors, tree species and excess dogs and cats (no more than two total per household).”

But when Yellen moved in, the body mass of her security detail upset the community’s order.

WSJ reports that “As neighbors tell it, earlier this year, the security detail protecting new Federal Reserve Chairwoman Janet Yellen barreled through the cul-de-sac where she lives in oversize vans loaded with guns, cameras and takeout pizza. It established an ‘armed camp’ next door to [Hillandale resident Sallie Forman's] townhome, according to a written bill of grievances presented by concerned neighbors deeming the uniformed police presence ‘uncomfortable for residents of various religious persuasions,’ such as Quakers.”

The community’s grievances against Yellen’s detail also said security trucks “weighing approximately 7,000 pounds each” sit idling on the street for “approximately 22 minutes daily” at each Yellen morning pickup. When Ms. Yellen leaves her home, a second truck then “speedily pulls out of the security driveway…all the while spilling fluid onto the street, which has now left a permanent stain.”

Hillandale bylaws, the Journal notes, “expressly prohibit car fluid spills in the common areas.”

The publication also said that “neighbors seem especially put off by the aesthetics of the security detail, in particular their blue uniforms”. One resident was particularly put off by the guards’ “doughnut bellies.”

Residents also feel that even though there is more security with Yellen’s presence, they won’t be any safer.

“These characters are only here for Janet Yellen. They’re not going to be distracted by robbers, rapists, or any other thing. Besides, these guys couldn’t catch a thief if their lives depended on it,” said one neighbor.

According to the Journal, some Hillandale resident believe the price of security just got too high.

“The government is paying $5,000 or $6,000 a month or more to rent a whole townhouse in Georgetown to put cops in,” says international attorney William Shawn, who lives down the street from Yellen. “Is this really necessary, he wonders, to protect an unarmed economist from Brooklyn?”

via WallStreet Journal

Monday, June 23, 2014

Low interest rates to help housing

By keeping interest rates low, we are trying to make homes more affordable and revive the housing market.

Friday, June 20, 2014

Janet Yellen statement FOMC June 2014

The Federal Open Market Committee concluded its June meeting earlier today. As was indicated in our policy statement, the Committee decided to make another modest reduction in the pace of its purchases of longer-term securities. The Committee maintained its forward guidance regarding the federal funds rate target and reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate.

Janet Yellen
Today’s policy actions reflect the Committee’s assessment that the economy is continuing to make progress toward our objectives of maximum employment and price stability. In the labor market, conditions have improved further. The unemployment rate, at 6.3 percent, is four-tenths lower than at the time of our March meeting, and the broader U-6 measure—which includes marginally attached workers and those working part time but preferring full-time work—has fallen by a similar amount. Even given these declines, however, unemployment remains elevated, and a broader assessment of indicators suggests that underutilization in the labor market remains significant.

Although real GDP declined in the first quarter, this decline appears to have resulted mainly from transitory factors. Private domestic final demand—that is, spending by domestic households and businesses—continued to expand in the first quarter, and the limited set of indicators of spending and production in the second quarter have picked up. The Committee thus believes that economic activity is rebounding in the current quarter and will continue to expand at a moderate pace thereafter. Overall, the Committee continues to see sufficient underlying strength in the economy to support ongoing improvement in the labor market.

Inflation has continued to run below the Committee’s 2 percent objective, and the Committee remains mindful that inflation running persistently below its objective could pose risks to economic performance. Given that longer-term inflation expectations appear to be well anchored, and in light of the ongoing recovery in the United States and in many economies around the world, the Committee continues to expect inflation to move gradually back toward its objective. The Committee will continue to assess incoming data carefully to ensure that policy is consistent with attaining the FOMC’s longer-run objectives of maximum employment and inflation of 2 percent.

This outlook is reflected in the individual economic projections submitted in conjunction with this meeting by the FOMC participants. As always, each participant’s projections are conditioned on his or her own views of appropriate monetary policy. The central tendency of the unemployment rate projections is slightly lower than in the March projections and now stands at 6.0 to 6.1 percent at the end of this year. From there, Committee participants generally see the unemployment rate declining to its longer-run normal level by the end of 2016.

The central tendency of the projections for real GDP growth is 2.1 to 2.3 percent for 2014, down notably from the March projections, largely because of the unexpected contraction in the first quarter. Over the next two years, the projections for real GDP growth remain somewhat above the estimates of longer-run normal growth. Finally, FOMC participants continue to see inflation moving only gradually back toward 2 percent over time as the economy expands. The central tendency of the inflation projections is 1.5 to 1.7 percent in 2014, rising to 1.6 to 2.0 percent in 2016.

As I noted at the outset, the Committee decided today to make another measured reduction in the pace of asset purchases. Starting next month, we will be purchasing $35 billion of securities per month, down $10 billion per month from our current rate. Even after today’s action takes effect, we will continue to expand our holdings of longer-term securities, and we will also continue to roll over maturing Treasury securities and reinvest principal payments from the FOMC’s holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These sizable and still-increasing holdings will continue to put downward pressure on longer-term interest rates, support mortgage markets, and make financial conditions more accommodative, helping to support job creation and a return of inflation to the Committee’s objective.

Today’s announced reduction in the pace of asset purchases reflects the Committee’s expectation that progress toward its economic objectives will continue. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor markets and inflation moving back over time toward its longer-run objective, the Committee will likely continue to reduce the pace of asset purchases in measured steps at future meetings. However, as I have emphasized before, purchases are not on a preset course, and the Committee’s decisions about the pace of purchases remain contingent on its outlook for jobs and inflation as well as its assessment of the likely efficacy and costs of such purchases.

Let me now turn to the framework we will be applying as we consider interest rate policy. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2 percent inflation.

This broad assessment will not hinge on any one or two indicators, but will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. Based on its current assessment of these factors, the Committee anticipates that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and longer-term inflation expectations remain well anchored. Further, once we begin to remove policy accommodation, it is the Committee’s current assessment that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

This guidance is consistent with the paths for appropriate policy as reported in the participants’ projections, which show the federal funds rate for most participants remaining well below longer-run normal values at the end of 2016. Although FOMC participants provide a number of explanations for the federal funds rate target remaining below its longer-run normal level, many cite the residual effects of the financial crisis. These include restrained household spending, reduced credit availability, and diminished expectations for future growth in output and incomes, consistent with the view that the potential growth rate of the economy may be lower for some time.

Let me reiterate, however, that the Committee’s expectation for the path of the federal funds rate target is contingent on the economic outlook. If the economy proves to be stronger than anticipated by the Committee, resulting in a more rapid convergence of employment and inflation to the FOMC’s objectives, then increases in the federal funds rate target are likely to occur sooner and to be more rapid than currently envisaged. Conversely, if economic performance disappoints, resulting in larger and more persistent deviations from the Committee’s objectives, then increases in the federal funds rate target are likely to take place later and to be more gradual.

Before taking your questions, I’d like to provide an update on the Committee’s ongoing discussions on the mechanics of normalizing the stance and conduct of monetary policy. To be clear, these discussions are in no way intended to signal any imminent change in the stance of monetary policy. Rather, they represent prudent planning on the part of the Committee and reflect the Committee’s intention to communicate its plans to the public well before the first steps in normalizing policy become appropriate.

The Committee is confident that it has the tools it needs to raise short-term interest rates when it becomes appropriate to do so and to control the level of short-term interest rates thereafter, even though the Federal Reserve will continue to have a very large balance sheet for some time. The Committee’s recent discussions have centered on the appropriate mix of tools to employ during the normalization process and the associated implications for the degree of control over short-term interest rates, the functioning of the federal funds market, and the extent to which the Federal Reserve transacts with financial institutions outside the banking sector. The Committee is constructively working through the many issues related to normalization and will continue its discussions in upcoming meetings, with the expectation of providing additional details later this year.

Thursday, June 19, 2014

Fed reduces bond buying to $35 Billion a month

The Fed and Janet Yellen is scaling back its bond-buying to $35 billion a month from $45 billion. And, of course, its interest-rate target stayed near zero (as it has been since December 2008).

Fed officials sharply downgraded their projections for economic growth this year.  You could see that coming after the economic contraction in the first quarter.

Tuesday, June 3, 2014

Gap between rich and poor

Whether a widening gap between the rich and everyone else is a problem and what, if anything, should be done about it is up for debate.

"I personally find it very worrisome," said Federal Reserve Chairwoman Janet Yellen during a recent Senate hearing. Inequality can "determine the ability of different groups to participate equally in democracy, and have grave effects on social stability over time." 

Whether the widening wealth gap is a serious problem, one thing is clear: The richest have a massive amount of money, and they're getting more of it every day.


Wednesday, May 14, 2014

Janet Yellen Quote May 2014

Readings on housing activity — a sector that has been recovering since 2011 — have remained disappointing so far this year and will bear watching,

Janet Yellen avoids bait

Last week, Janet Yellen spoke in front of Congress, and nothing Earth-shattering came out of it. Typically, these Fed-head testimonies are more for the benefit of the politicians and their political posturing than they are for any meaningful information. 

Basically, the left tries to get the Federal Reserve Chair to say that income inequality is bad and the right tries to get the Federal Reserve Chair to say that our spending is too high. To her credit, Yellen didn’t seem to take the bait.

Monday, April 28, 2014

Janet Yellen on deflation

According to Yellen, deflation is detrimental to both businesses and households: businesses are impacted because deflation increases real interest rates, dis-incentivizing them from capital formation and increasing output and creating jobs, which is counter-productive to the Fed’s monetary stimulus efforts to induce economic recovery. 

Further, when interest rates increase, this increases the debt burden for households and borrowers alike, which impacts consumption.

Thursday, April 24, 2014

Yellen will resist raising interest rates

Yellen has already indicated a willingness to change policy in line with incoming data and not pre-commit the Fed to specific indicators or time markers. 

It suggests that Yellen will be slower to pull the trigger in the face of either higher inflation or more robust wage gains than some on Wall Street and even in the inner circles of monetary policy would like.

Monday, March 24, 2014

Janet Yellen first press conference

Janet Yellen braved her first press conference. and had to explain her committee’s decision to continue cutting back the bank’s quantitative easing (QE) programme, and set out its new “forward guidance” about future interest rates.

The economy, Ms Yellen explained, can cope with this. She repeatedly returned to labour-market improvements: falling unemployment rates and other indicators such as the number of “marginally attached” workers, and those that work part-time but would prefer a full-time job.

In mid-2013 government-bond yields rose by over 1 percentage point as the Fed started to moot tapering its QE programme. This fed through to mortgage rates and may have dampened demand for new houses.

It points to another worry. Other important interest rates, including those firms pay in debt markets, are also closely linked to government-bond yields. If those yields rise again America may need a fresh monetary boost. Ms Yellen’s guidance may have to get much stronger.

Janet Yellen rate rise surprise

No one expects the Fed to lift rates in the near term. Still, comments this week from Janet Yellen, who just took over as Fed chair, caught many in the market off guard when she suggested the central bank may be in a position to raise its key interest rate as soon as six months after ending its massive bond-buying stimulus.

That could put the first rate hike on the table by the spring of 2015 compared with previous expectations for no sooner than the second half of the year. Indeed, rate futures markets now assign a 52 percent probability to the Fed's April 2015 meeting for the first rate hike versus just a 33 percent chance a month ago.

Read full article at

Monday, March 3, 2014

Fed cannot regulate Bitcoins

Bitcoin is a payment innovation that’s taking place outside the banking industry. To the best of my knowledge there’s no intersection at all, in any way, between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the Fed doesn’t have authority to supervise or regulate Bitcoin in anyway.

It’s not so easy to regulate Bitcoin because there’s no central issuer or network operator. This is a decentralized, global [entity].

Tuesday, February 25, 2014

Janet Yellen asked for ID at G20 meet in Sydney

The head of the US Federal Reserve was stopped on Saturday as she entered a restaurant at the Intercontinental in Sydney, Australia, one of the host hotels for the weekend summit of finance ministers and central bankers.

Wall Street Journal international finance reporter Ian Talley, who was close by, said the central bank chief had to rifle through her purse to produce her credentials.

Thursday, February 20, 2014

Yellen's husband George Akerlof resigns from academic unit

George Akerlof, the husband of the new Federal Reserve Chief Janet Yellen, says he has resigned from an academic advisory board funded by a large Swiss financial institution UBS. 

Mr Akerlof is a Nobel Prize winner in economics, and in a statement says he is stepping down as a member of the advisory board of the UBS International Center of Economics in Society, located at the University of Zurich.

Tuesday, February 18, 2014

Ed Perlmutter calls Bernanke smart and not very exciting

Rep. Ed Perlmutter Democrat from Colorado in a praise described Bernanke as “very smart, very steady, and not very exciting. 
Then he turned to Janet Yellen and says “I have to say, you’re following in his footsteps.” 

Yellen’s response: “Thank you. I appreciate that.” 

Finally the first female central bank head and she is proving that she is equal to any men and can be as boring as any men who preceded her. 

Wednesday, February 12, 2014

Yellen is viewed as pro job growth

Janet Yellen, became the first woman to lead the Fed at age 67. She succeeded Ben Bernanke on Feb 1, who stepped down after helping lead the nation's recovery from the 2008 financial crisis. 

She is generally viewed as more concerned about promoting job growth and less worried about risks such as high inflation than Bernanke. Yellen was previously the Fed's vice chair.

Tuesday, February 11, 2014

Janet Yellen vs Paul Volcker and her biggest challenge

Janet Yellen is generally viewed as ├╝ber-dovish and of the same ilk, but history may force her pursue policies of more maligned hardliners such as Paul Volcker, who was vilified for his efforts to contain inflation by hiking rates. 

By historical terms, the current monetary policy is extremely loose. The start of the ‘taper’ has begun the process of tightening financial conditions,

Tough challenge ahead ?

Yellen’s biggest practical and intellectual challenge will be to unlock the mysteries of the labour market. She and her colleagues at the Federal Reserve need to decipher whether the Americans that are dropping out of the workforce is a permanent or temporary phenomenon and whether they can be ever coaxed back through policies that support economic growth.

Monday, February 10, 2014

Janet Yellen testimony on Tuesday and Thursday

Janet Yellen's first test as chair of the Federal Reserve comes on Tuesday when she faces US lawmakers, some hostile to the central bank, who will want to know how committed she is to winding down the Fed's support for the economy.

Yellen, who succeeded Ben Bernanke last week, will have a chance to set a mostly upbeat tone and point to signs of steady economic progress, despite some recent bumps in the road.

The Fed has embarked on perhaps its most difficult policy shift after five years of ultra-easy money. It has begun scaling back its bond-buying stimulus, but at a measured pace that could frustrate some Republicans who think the program is reckless.

Those concerns will be aired on Tuesday, when Yellen appears before the Republican-controlled House Financial Services Committee to testify on the Fed's semi-annual monetary policy report.

Her testimony will be released at 8.30 am (1330 GMT), although the hearing does not begin until 10 am (1500 GMT). She testifies to the Democrat-controlled Senate Banking Committee on Thursday.


Monday, February 3, 2014

Janet Yellen a strong acomplished woman

When Janet Yellen takes over the reins of the Federal Reserve on Monday, she will become one of the most powerful women in the world — a historic achievement that she has yet to fully embrace.

Her status has been trumpeted by others — she is featured in a Microsoft commercial “celebrating the heroic women of 2013” and heralded by glossy magazine Marie Claire as having “triumphed over the haters” — but Yellen has been reticent about the role that her sex has played in her four-decade career. She has even instructed staff members that her new title be simply “chair,” rather than “chairwoman.”

This is not the first time Yellen has broken through gender barriers in a field notorious for its sharp-elbowed machismo. She was the only woman in her PhD class at Yale University. Two dozen economists earned doctorates from Yale University in 1971, according to the school. Yellen was the only woman.

Yellen’s silence is a reminder that the workplace can still be treacherous terrain for many women. She didn’t speak out when President Obama mistakenly referred to her as “Mr. Yellen,” nor when a few snarked that she wore the same outfit to her confirmation hearing and nomination ceremony.

Wednesday, January 29, 2014

Janet Yellen eats dinner

Fed Chair Janet Yellen chomped on a $35.14 dinner at Nopa Kitchen + Bar in Penn Quarter the other week.According to sources Yellen enjoyed her prixe fixe Restaurant Week deal with a group of friends at a quiet dinner.

Wednesday, January 22, 2014

5 talking points about Janet Yellen

1.  Janet Yellen was born in Brooklyn, N.Y.

2. She attended Pembroke, the women’s college of Brown University, where she majored in economics.

3. Yellen earned her economics Ph.D. at Yale University.

4. In 1980, she joined the University of California at Berkeley’s Graduate Business School faculty in 1980.

5. President Bill Clinton appointed her to the Federal Reserve Board of Governors in 1994.

6. Seeing her wisdom, President Clinton appointed Yellen to head the White House Council of Economic Advisors in 1997.

7. Interestingly, Yellen left the White House in less than two years to rejoin the Berkeley faculty. Her friends suggest the position was too competitive and political for her.

8. In 2004, the San Francisco Federal Reserve Bank selected Yellen as president. She made it a center of macroeconomic research.

9. Janet Yellen will the first female Fed Chief in US History

10. Yellen married George Akerlof after only 6 months of dating.

Wednesday, January 15, 2014

Yellen's first task in the Fed

The U.S. Senate confirmed Janet Yellen as the next Federal Reserve chair last week. One of her first tasks will be to wind down the "QE3" stimulus program.

The first cut takes place this month. But managing the process to scale it down at the right speed, in the right increments, will require an incredible amount of finesse.

If Yellen leads the Fed to dial back too fast, it could disrupt the budding economic recovery. But if they "taper" too slow, we could get an even more dangerous financial bubble, higher inflation, or both.

This is the reason I call the Federal Reserve the most-powerful economic body in the world. Any mistake on their part could seriously damage the U.S. and the global economy as well.

Thursday, January 2, 2014

Yellen has differed with Bernanke before

Yellen has broken with Bernanke in the past, however. At a 2007 Fed meeting, Bernanke dismissed the danger posed by rising mortgage defaults, saying “the economy looks to be healthy.”

Yellen, a former University of California at Berkeley professor of economics, voiced the opposite opinion.

“The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst,” she said, according to a transcript.
Yellen said in her Nov. 14 confirmation hearing that she'll maintain the bond-buying program until a “strong recovery” convinces her to end it. She didn't provide details on how she might taper the program.

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