Fed’s shrinking of balance sheet via quantitative tightening is ‘a complete mistake,’ says Mizuho

Fed’s shrinking of balance sheet via quantitative tightening is ‘a complete mistake,’ says Mizuho

The Federal Reserve’s attempt at shrinking its balance sheet through so-called quantitative tightening, or QT,  is “a complete mistake,” according to Mizuho’s chief economist for the U.S. “There is a nontrivial probability that market liquidity will be adversely affected well before the targeted $2 trillion has been rolled off, preventing the Fed from accomplishing its … Read more

Dow Drops Nearly 500 Points on China Protests, Fed Comments

Dow Drops Nearly 500 Points on China Protests, Fed Comments

U.S. stocks pulled back Monday, pushed down by widespread protests across China and hawkish comments from Federal Reserve officials about the path of interest-rate increases.  The S&P 500 fell 62.18 points, or 1.5%, to 3963.94. The Dow Jones Industrial Average lost 497.57 points, or 1.4%, at 33849.46. The Nasdaq Composite declined 176.86 points, or 1.6%, … Read more

Book notes: Zero interest rate policy and the new abnormal, by Michael Beenstock

Book notes: Zero interest rate policy and the new abnormal, by Michael Beenstock

Michael Beenstock, Zero interest rate policy and the new abnormal: a critique, Oxford University Press, 2022, xiv + 373 Some central banks began to detect a sharp drop in the equilibrium real short-term interest rate (or r*, the natural rate of interest), even before the advent of the global financial crisis.1 In Japan, the realisation that … Read more

Fed Minutes Show Most Officials Favored Slowing Rate Rises Soon

Fed Minutes Show Most Officials Favored Slowing Rate Rises Soon

WASHINGTON—Most Federal Reserve officials thought they should slow the pace of interest-rate increases after approving a 0.75-percentage-point rate rise at their meeting earlier this month to battle high inflation. Their discussion at the meeting, described in minutes of the gathering released Wednesday, suggests they could downshift to a rate rise of 0.5 percentage point, or … Read more

Central banks must buy bitcoin to hedge against sanctions: Harvard Ph.D. candidate

Central banks must buy bitcoin to hedge against sanctions: Harvard Ph.D. candidate

A research paper published at Harvard University is advocating that central banks should buy bitcoin BTCUSD, +2.56% as a hedge against sanctions by other countries. The paper, titled “Hedging Sanctions Risk: Cryptocurrency in Central Bank Reserves,” was authored by Ph.D. candidate Matthew Ferranti from Harvard’s economics department, and likens central banks’ gold reserves to potential … Read more

Key inflation report indicates the Fed’s rate hikes may be starting to cool prices

Key inflation report indicates the Fed’s rate hikes may be starting to cool prices

Minneapolis CNN Business  —  A key measure of inflation, wholesale prices, rose by 8% in October from a year before, according to the latest report from the Bureau of Labor Statistics. While still historically high, it was the smallest increase since July of last year and significantly better than forecasts. It’s the second inflation report … Read more

New stock-market lows ahead? What investors need to know as Fed signals rates will be higher for longer.

New stock-market lows ahead? What investors need to know as Fed signals rates will be higher for longer.

Federal Reserve Chairman Jerome Powell sent a clear signal interest rates will move higher and stay there longer than previously anticipated. Investors wonder if that means new lows for the beaten-down stock market lie ahead. “If we don’t see inflation start to come down as the fed-funds rate goes up, then we’re not getting to … Read more

The Australian Greens say the Reserve Bank needs to be more democratically accountable

The Australian Greens say the Reserve Bank needs to be more democratically accountable

The Reserve Bank and the federal government need to jointly deploy inflation policy, using different tools to overcome different outbreaks of inflation, the Australian Greens say. Key points: The Reserve Bank should be helping to direct the flow of credit in Australia’s economy to more productive ends It should help governments to transition to a low emission economy Monetary … Read more

Fed warns of ‘low’ market liquidity in $24 trillion Treasury market, in latest financial stability report

Fed warns of ‘low’ market liquidity in  trillion Treasury market, in latest financial stability report

The Federal Reserve on Friday confirmed what many investors were saying for some time: the $24 trillion Treasury market has been experiencing low levels of market liquidity in recent months. The central bank has been rapidly increasing interest rates since March as part of a fight to bring inflation down from a 40-year high. The … Read more

Book notes: Yellen: the trailblazing economist who navigated an era of upheaval, by Jon Hilsenrath

Book notes: Yellen: the trailblazing economist who navigated an era of upheaval, by Jon Hilsenrath

Jon Hilsenrath, Yellen: the trailblazing economist who navigated an era of upheaval, Harper Collins, 2022, 400 pages This book provides a powerful story of the illustrious career of Janet Yellen – in my view, the most successful economist in the world. Yellen has gained particular notoriety as the first female chair of the Board of … Read more