Sunday, March 16, 2014
Thursday, January 16, 2014
Financial stability concerns should not deter Fed on policy: Bernanke
Financial stability concerns should not deter Fed on policy: Bernanke
http://s1.reutersmedia.net/resources/r/?m=02&d=20140116&t=2&i=830061613&w=580&fh=&fw=&ll=&pl=&r=CBREA0F1B6Z00
WASHINGTON
U.S. Federal Reserve Chairman Ben Bernanke pauses as he responds to reporters during his final planned news conference before his retirement, at the Federal Reserve Bank headquarters in Washington, December 18, 2013.
Credit: Reuters/Jonathan Ernst
WASHINGTON (Reuters) – The U.S. Federal Reserve should give the economy the stimulus it needs despite “credible” worries that its massive bond-buying program could destabilize the financial system, Fed Chairman Ben Bernanke said on Thursday.
In his last planned public remarks as head of the central bank, Bernanke said concern about the potential harm to financial stability is the only risk from unconventional monetary policies “that I find personally credible.”
But, he added “at this point we don’t think that, and I think I can speak for my colleagues on this, we don’t think that financial stability concerns should at this point detract from the need for monetary policy accommodation, which we are continuing to provide,” Bernanke said.
During his tenure, Bernanke pushed the Fed far into unconventional territory, not only slashing short-term interest rates to zero and keeping them there since December 2008, but providing long-term “forward guidance” assuring investors the Fed would keep interest rates low for a long time to come.
In a second unprecedented move, he quadrupled the Fed’s balance sheet to $ 4 trillion through three rounds of bond-buying aimed at lowering long-term rates and spurring hiring.
“I do think by the way that they both have been helpful,” Bernanke said at a Brookings Institution event. And neither, he said, have delivered the potential costs that many warned they would, including unbridled inflation.
Inflation, by the Fed’s preferred gauge, has risen just 1.1 percent in the past 12 months, well below the Fed’s 2-percent target.
Janet Yellen, currently Fed vice chair, will take the reins as Fed chair on February 1, just after the Fed’s first policy-setting meeting of the year.
Last month, the Fed took a first step toward dialing down its massive stimulus with a decision to reduce monthly purchases of Treasuries and mortgage-backed securities to $ 75 billion from $ 85 billion a month.
The Fed will probably phase the program out entirely late in the year, Bernanke said at the time.
He also told investors that the Fed was nowhere near to tightening policy, saying the U.S. central bank would keep rates near zero until “well past the time” that unemployment falls to 6.5 percent, especially if inflation continues to linger below the Fed’s 2-percent target.
Unemployment fell to 6.7 percent in December.
(Reporting by Jonathan Spicer and Jason Lange; Writing by Ann Saphir; Editing by James Dalgleish and Paul Simao)
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Saturday, November 30, 2013
Thursday, July 18, 2013
Dollar firms up, shares sag after Bernanke
1 of 7. An employee of the Tokyo Stock Exchange (TSE) works at the bourse in Tokyo June 13, 2013.
Credit: Reuters/Toru Hanai
TOKYO |
TOKYO (Reuters) – Asian shares fell on Thursday, as concerns over financing available to property developers weighed on Chinese markets, although overall sentiment was supported by Federal Reserve Chairman Ben Bernanke’s pledge to keep monetary policy easy for the foreseeable future.
Regional tech-related stocks were hurt by U.S. Intel Corp’s (INTC.O) dismal annual revenue forecast and capital spending cuts, citing softer personal computer sales and weakness in China, one of its biggest markets.
The dollar held on to modest overnight gains after Bernanke stuck to a timeline that he first outlined in June to wind down the Fed’s $ 85 billion a month bond-buying program, but he went out of his way to stress that nothing was set in stone.
China’s CSI300 share index .CSI300 shed 1.1 percent, hitting a one-week low and lately forming a “death cross” – a bearish signal – with the 50-day moving average breaking below the 200-day moving average.
The pace of the monthly rise in China’s home prices slowed slightly in June for a third straight month, though the year-on-year gains were the strongest this year, underlining challenges faced by Beijing in its fight to tame housing inflation.
“Fears are growing that the liquidity shock a few weeks ago may be starting to trickle into the sector,” said Lee Wee Liat, BNP Paribas head of Asia property.
China’s frothy property market is seen by analysts as one of the biggest financial risks to the world’s second-largest economy, along with the run-up of debt by local governments and the explosive growth of the opaque “shadow banking” system.
While China’s money market rates have since moderated the central bank allowed short-term borrowing costs to spike to record levels on June 20, sending a blunt message to overstretched lenders that it was determined to bring risky credit expansion under control.
Asian shares, as measured by the MSCI Asia-Pacific ex-Japan index .MIAPJ0000PUS, slipped 0.3 percent, reversing early rise to hover near a five-week high touched on Wednesday.
Seoul shares .KS11 fell 0.6 percent, with index heavyweight Samsung Electronics Co Ltd (005930.KS) down 1.5 percent partly on the back of Intel’s grim outlook, while Taipei’s share index .TWII dropped 0.9 percent.
Underscoring worries over China’s economic slowdown, Japanese manufacturers’ mood worsened in July for the first time in eight months, a Reuters poll showed.
Tokyo’s Nikkei .N225 gained 0.5 percent, however, helped by a 4.5 percent rise in SoftBank Corp (9984.T) after China’s e-commerce Alibaba Group, of which the Japanese mobile operator owns about 30 percent, nearly tripled its net income in the first three months of the year.
DOLLAR STEADY
The dollar was steady against a basket of major currencies .DXY, holding on to overnight gains after Bernanke’s remarks.
The U.S. currency was up 0.2 percent at 99.790 yen, extending the previous session’s 0.5 percent rise versus the yen, while the euro was steady at $ 1.3111.
“There is something in these comments for everybody,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. “Bernanke has done a good job of leaving himself plenty of maneuver room in terms of policy.”
Bernanke’s remarks came as the Fed’s Beige Book report of anecdotal information on business activity showed the U.S. economy continued to grow at a modest to moderate pace in June and early July, but U.S. housing data was disappointing.
In the commodity markets, gold stabilized after falling 1.3 percent on Wednesday, while copper prices gained 0.3 percent but remained below $ 7,000 a metric ton (1.1023 tons) after falling 1.5 percent in the previous session.
Brent crude prices dipped 0.1 percent to around $ 108.50 a barrel after gaining 0.6 percent on Wednesday after data from U.S. Energy Information Administration showed a fall in American crude stocks.
(Additional reporting by Clement Tan in HONG KONG, Ian Chua in Sydney and Tomo Uetake in Tokyo; Editing by Eric Meijer and Simon Cameron-Moore)
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Dollar firms up, shares sag after Bernanke
Wednesday, July 17, 2013
Dollar off three-week low, globals shares flat before Bernanke testimony
1 of 7. An employee of the Tokyo Stock Exchange (TSE) works at the bourse in Tokyo June 13, 2013.
Credit: Reuters/Toru Hanai
TOKYO |
TOKYO (Reuters) – Asian shares edged up on Wednesday, while the dollar held near a three-week low on expectations that Federal Reserve Chairman Ben Bernanke will reiterate later in the day that U.S. monetary policy is to stay accommodative.
Bernanke is due to testify to Congress on Wednesday and Thursday, which could provide further clarity on when the U.S. central bank will roll back its $ 85 billion a month bond-buying program.
His comments last week that highly accommodative monetary policy would be needed for the foreseeable future wrongfooted investors, who had bet on the Fed to scale back stimulus as soon as September, sending the dollar sharply lower and equities higher.
“He probably does not want to knock down share prices. So he may want to avoid being too hawkish,” said Koichi Takamatsu, a manager of forex at Nomura Securities in Tokyo.
The dollar .DXY held not far from a three-week low after falling 0.7 percent on Tuesday.
Traders said preemptive moves to cut long dollar positions allowed for a bounce if Bernanke did not appear to be extremely dovish. Bernanke’s prepared remarks for his congressional appearance will be released at 1230 GMT.
“We continue to favor running long dollar positions versus G10 currencies, whose central banks are in easing mode, particularly sterling right now,” analysts at BNP Paribas wrote in a note.
UPBEAT EQUITIES
Asian shares, as measured by the MSCI Asia-Pacific ex-Japan index .MIAPJ0000PUS, gained 0.3 percent, while Hong Kong’s Hang Seng Index .HSI rose 0.7 percent and Seoul shares .KS11 advanced 0.8 percent.
Australian shares .AXJO put on 0.1 percent, with global miner BHP Billiton (BHP.AX) up 2.3 percent after it posted a robust 9 percent rise in iron ore output to a record annual 187 million tonnes.
In terms of valuations, Australian equities carry a 12-month forward price-to-earnings ratio of 13.3, more expensive than the MSCI Asian gauge’s 11, according to Thomson Reuters Datastream.
U.S. stocks eased overnight, with the S&P 500 .INX snapping an eight-day winning streak after disappointing sales from Coca-Cola (KO.N). .N
In the commodity markets, gold dipped 0.1 percent, giving up some of Tuesday’s 0.8 percent rise, while copper prices held steady at $ 7,000 a tonne after gaining 1.2 percent in the previous session.
Brent crude prices fell 0.3 percent to below $ 108 a barrel, retreating from a 3-1/2 month high hit on Tuesday.
(Additional reporting by Ian Chua in SYDNEY and Hideyuki Sano in TOKYO; Editing by Eric Meijer)
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Dollar off three-week low, globals shares flat before Bernanke testimony
Lawmakers likely to press Bernanke on Fed stimulus
WASHINGTON (AP) — Ben Bernanke is expected to face tough questions Wednesday from U.S. lawmakers about when the Federal Reserve might start to scale back its low interest rate policies that have helped support economic growth.
The Fed chairman will also be pressed on the state of the economy and his future at the Fed after his second four-year term as chairman ends in January. And he may even criticize Congress for federal spending cuts and tax increases that have weighed on the economy this year.
But investors will focus on Bernanke’s comments about the Fed’s potential timetable for slowing its bond buying.
Bernanke’s two days of testimony begin Wednesday before the House Financial Services Committee. On Thursday he goes before the Senate Banking Committee.
Since the financial crisis erupted in 2008, the Fed has kept its benchmark short-term interest rate near zero. And since late last year, it’s been buying $ 85 billion a month in mortgage and long-term Treasury bonds to try to reduce long-term rates and induce people and businesses to borrow and spend.
Financial markets began to gyrate after then Fed’s June 18-19 meeting. That’s when Bernanke sketched a rough timetable for the Fed’s bond purchases. He said the Fed could start scaling back its bond buying later this year and end it around mid-2014 if the economy strengthens enough to be in line with the Fed’s more optimistic forecast.
Stocks plunged, even though Bernanke’s comments were generally in line with what economists had been expecting. The Dow Jones industrial average sank 560 points in two days. Investors feared Bernanke’s comments meant the Fed was ready to let rates rise sooner and faster than they’d expected.
Since then, the chairman and other Fed officials have sought to calm investors. They’ve stressed that the Fed won’t pull back on its stimulus unless the evidence was clear that the economy and the job market were improving as much as the Fed had forecast. If not, the Fed would keep its support intact. It might even increase its stimulus it felt the economy needed more support.
The stock market gradually recovered. And when Bernanke reinforced his go-slow message at a conference last week near Boston, the stock market celebrated. The Dow and the Standard & Poor’s 500 stock index reached all-time highs.
The yield on the 10-year Treasury, a benchmark for mortgages and other long-term interest rates, also fell as investors bought bonds. It was at 2.54 percent on Tuesday after surging as high as 2.74 percent on July 5. That’s still well above the 1.63 percent reached on May 3.
At last week’s conference, Bernanke said unemployment was still too high and noted that inflation remains below the Fed’s 2 percent target — both reasons to keep low rate policies in place. He said the economy was also being held back by higher federal taxes and budget cuts.
“If you put all of that together,” Bernanke said, “you can only conclude that highly accommodative monetary policy for the foreseeable future is what is needed for the U.S. economy.”
The chairman signaled that even after the Fed starts to slow its monthly bond purchases, its overall policies will keep rates low. It plans, for example, to keep its investment holdings constant to avoid causing long-term rates to rise too fast. It also plans to keep short-term rates at record lows at least until unemployment reaches 6.5 percent. Unemployment is currently 7.6 percent.
And Bernanke has said 6.5 percent unemployment is a threshold, not a trigger. The Fed might decide to keep its benchmark short-term rate near zero even after unemployment falls that low.
Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, expects Bernanke won’t deviate from last week’s message.
“I think Chairman Bernanke will try to calm the markets,” Sohn said. “I think he will say that the Fed’s exit strategy is totally dependent on future economic developments.”
Hiring has improved since the Fed’s bond buying began. Employers have created an average of 202,000 jobs a month this year, up from 180,000 in the previous six months.
Still, unemployment remains elevated, and economic growth has been modest the past three quarters.
The economy grew at a subpar 1.8 percent annual rate in the January-March quarter. Many economists think growth in the April-June quarter weakened to an annual rate of 1 percent or less. They foresee a moderate rebound in the second half of this year.
Bernanke may be delivering his last economic report to Congress. While he has not publicly announced his plans, it is widely thought that he does not want to remain for a third term as chairman.
Vice Chair Janet Yellen is considered the front-runner to replace Bernanke, but President Barack Obama has not tipped his hand yet about possible replacements.
Former Treasury Secretary Lawrence Summers, who served Obama in the first term as chairman of the National Economic Council, is also considered a potential candidate.
The expectation is that Obama will nominate a replacement in late summer or early fall so that the Senate will have time to hold confirmation hearings this year.
Lawmakers likely to press Bernanke on Fed stimulus
Tuesday, July 16, 2013
Shares, euro steady ahead of data, Bernanke
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1 of 7. A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013.
Credit: Reuters/Toru Hanai
LONDON |
LONDON (Reuters) – European markets traded in narrow ranges early on Tuesday as investors shied away from major moves ahead of inflation and German confidence data and awaited further clues on U.S. monetary stimulus.
The broad FTSEurofirst 300 .FTEU3 share index inched up 0.1 percent and the euro was firm at $ 1.3070.
Markets readied for UK and euro zone inflation figures at 0830 and 0900 GMT and what is expected to be a third straight improvement in the ZEW German sentiment indicator at 0900 GMT.
Federal Reserve Chairman Ben Bernanke’s twice-yearly monetary policy report to Congress on Wednesday and Thursday was set to offer more clues on the U.S. central bank’s policy as it looks to wind down its stimulus program. “The recent mixed data shows how difficult it is for the Fed, and also consequently for the markets, to read when the first tapering will be.” said Rabobank economist Philip Marey.
“If he (Bernanke) seems more or less satisfied with how things are going then that would be taken as an indication that we are going to see something in September.”
Benchmark German government bond yields tracked a tick-up in U.S. Treasuries overnight, while euro zone periphery debt, with the exception of Greece, made minor gains. <GVD/EUR>
In Asian trading, Japan’s Nikkei .N225 added 0.64 percent after Citigroup’s strong earnings had helped the S&P 500 .SPX end higher for an eighth day.
Further south, the Australian dollar surged half a U.S. cent after minutes from this month’s Reserve Bank of Australia meeting gave little hint of a near-term rate cut.
Commodity markets were mixed after Chinese data on Monday.
(Reporting by Marc Jones; Editing by John Stonestreet)
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Shares, euro steady ahead of data, Bernanke
Saturday, May 18, 2013
Bernanke upbeat on innovation outlook in commencement address
U.S. Federal Reserve Chairman Ben Bernanke attends the G20 finance ministers meeting during the Spring Meeting of the International Monetary Fund and World Bank in Washington, April 19, 2013.
Credit: Reuters/Yuri Gripas
WASHINGTON |
WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke painted an upbeat picture on Saturday for the potential of innovation to lift living standards, delivering a sweeping look at the last 100 years that included memories of his 1963 South Carolina home.
Bernanke made no reference to monetary policy or the immediate outlook for the U.S. economy in prepared remarks to graduates of Bard College at Simon’s Rock, Massachusetts.
But the die-hard baseball fan did manage to work in a reference to one of the sport’s greats.
“Is it true, then, as baseball player Yogi Berra said, that the future ain’t what it used to be?,” the chairman said, noting the existence of serious skepticism that leaps in computers and other information technology would yield the same dramatic boost to growth and living standards as previous episodes of industrial revolution.
“Nobody really knows; as Berra also astutely observed, it’s tough to make predictions, especially about the future. But there are some good arguments on the other side of this debate.”
Bernanke delivers testimony on the U.S. economy on Wednesday before the congressional Joint Economic Committee.
His words will be parsed for any hint that he favors tapering Fed bond purchases, currently running at an $ 85 billion monthly pace. But recent U.S. economic data has been mixed, and economists polled by Reuters continue to expect the bond buying to continue until later this year, if not into early 2014.
Bernanke did not tip his hand during his comments to graduates, but he did offer some rare insights into his childhood home in Dillon, South Carolina to illustrate how life has not changed all that much in the last 50 years.
“We had a dishwasher, a washing machine, and a dryer. My family owned a comfortable car with air conditioning and a radio, and the experience of commercial flight was much like today but without the long security lines,” he recalled.
There was no internet, but there was a color television “although, I must acknowledge, the colors were garish and there were many fewer channels to choose from.”
After pointing out that the so-called IT revolution had not been as transformative as all that, Bernanke then went on to outline several areas where technology may only have scratched the surface in exploiting the potential for change.
He argued that IT and biotechnology have tremendous scope to improve healthcare – which absorbs a considerable amount of U.S. household income and where costs are projected to rise – as well as the potential for the development of cleaner energy.
“As trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly,” he said. “In short, both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.”
(Reporting by Alister Bull; Editing by Tim Dobbyn)
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Bernanke upbeat on innovation outlook in commencement address
Friday, March 1, 2013
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Tuesday, February 26, 2013
Bernanke says Fed stimulus benefits clear, downplays risks
Bernanke says Fed stimulus benefits clear, downplays risks