Make it your homepage |   E-mail: Subscribe Unsubscribe

More online Americans say they’ve experienced a personal data breach

Saturday, April 19, 2014
News Making Money

Fed's Raskin Says Fed's Policy Moves 'Appropriate'

26/09/2011 06:58 (936 Day 02:24 minutes ago)

The FINANCIAL -- WASHINGTON -- U.S. Federal Reserve Gov. Sarah Bloom Raskin on Monday defended the Fed's latest unconventional move to stimulate the economy, saying additional policy measures are necessary to help the economy overcome a slew of extraordinary challenges.


"In my judgment, the Federal Reserve's deployment of our policy tools has been completely appropriate in promoting maximum employment and price stability," she said, speaking at a forum hosted by the Center for Financial Policy at University of Maryland's Robert H. Smith School of Business.

Last week, the Fed agreed to recast its $2.65 trillion securities portfolio in an effort to reduce long-term interest rates. The Fed plans to shift its holdings so it will have more long-term U.S. Treasury bonds and more mortgage debt than previously planned. It hopes the lower rates will boost investment and spending and provide a shot of adrenaline to the beleaguered housing sector.

Under the new program, dubbed "Operation Twist," the Fed will sell $400 billion in Treasury securities that mature within three years and reinvest the proceeds into securities that mature in six to 30 years, significantly tilting the balance of its holdings toward long-term securities. It will take the proceeds from its maturing mortgage-backed securities and reinvest them in other mortgage-backed securities. For the past year, it has been reinvesting that money into Treasury bonds, shrinking its mortgage portfolio.

Raskin said the shift is already having an impact.

"Our announcement appears to have been successful in narrowing the spread between rates on agency MBS and Treasury securities of comparable maturity," she said. "That spread had widened substantially since earlier this year, and the continuation of such a trend could have pushed up mortgage rates and adversely affected the housing sector."

Still, the Fed's action last week has been controversial. Three of the 10 voting Fed officials opposed the move. Also, Republican members of the U.S. Congress have voiced concern that the Fed's aggressive measures could hurt the economy rather than help it.

Raskin, however, said the Fed's actions last week and throughout the crisis have been appropriate to address the limping economy. She noted that the pace of the economic recovery has been modest and the recession has proven to be deeper than what experts initially thought. Meanwhile, the increases in economic activity have not been enough to lead to any sustained reduction in the unemployment rate, she noted.

She pointed out that the labor market is weak, credit conditions remain tight and many households may be unable to take advantage of lower borrowing rates.

"These circumstances have called for forceful policy measures," she said.

The Fed's policy moves have helped American families and businesses, Raskin added.

"By following our actual policy of keeping the target funds rate at its effective lower bound since late 2008, the Federal Reserve saved millions of jobs that would otherwise have been lost," she said. "Of course, substantial uncertainty surrounds various specific estimates, but there should be no doubt that the FOMC's forceful actions helped mitigate the consequences of the crisis and thereby spared American families and businesses from even greater pain."

Make Your Comment

Add NewSearchRSS
Only registered users and facebook social network members can write comments!

This text is replaced by the Flash movie.
This text is replaced by the Flash movie.
Parliament issues strong call for EU lobby transparency register to become mandatory

16/04/2014 16:53 (2 Day 16:29 minutes ago)

The FINANCIAL -- The report approved by MEPs gives an important signal to the European Commission that a far more ambitious approach is needed to secure genuine lobby transparency in the EU, according to EUbusiness Ltd.



Private Sector Driving U.S. Wind Market Forward

18/04/2014 16:46 (16:36 minutes ago)

The FINANCIAL -- The onshore wind energy sector is booming in the United States, where there's enough of the renewable resource on hand to meet the annual demands for 15 million homes. It may take one of the biggest retailers in the world, however, to usher in the necessary change in energy consumption, according to The NASDAQ OMX Group, Inc., exchange company.

M&A insurance grows as confidence increases

18/04/2014 16:18 (17:04 minutes ago)

The FINANCIAL -- As the green shoots of economic recovery have started to show in key markets like the UK and US, demand for mergers and acquisitions (M&A) insurance has been rising, according to Lloyd's, the world's specialist insurance market.


Developed by Aleksandre Chiabrishvili

Design built by Creo Group