Bullard Says It’s Time for Fed to Begin Raising Rates.
The US Federal Reserve looks to be on the cusp of raising interest rates this month for the first time in close to 10 years after solid jobs figures suggested the world’s largest economy was resilient enough to withstand it. WASHINGTON — The economy added a solid 211,000 net jobs in November, the Labor Department said Friday, and although the figure was down significantly from the previous month, it showed labor market growth strong enough to make a Federal Reserve rate hike this month a near certainty. Such a move would likely see the value of the dollar rise against the euro, potentially boosting Ireland as an attractive destination for visitors from the US, but making America pricier for Irish holidaymakers. Yellen stepped into the top job at the Federal Reserve last year with more experience than anybody who has led the central bank in its 100-year history.
Louis President James Bullard said the U.S. central bank’s policy setting is “extreme” and it’s time to start moving the benchmark lending rate and balance sheet “toward more normal levels.” “I continue to be an advocate for beginning policy normalization,” Bullard told a Philadelphia Fed conference Friday, according to his prepared remarks. OPEC announced it would maintain its policy of running near-record volumes of oil, taking no steps to reduce one of the worst crude gluts in history which has driven down prices for consumers.
About 273,000 people joined the labor force last month, lifting the closely watched participation rate up a bit to 62.5 percent, though still a historically low level. U.S. central bankers hold their last meeting of the year on Dec. 15-16 and are widely expected to raise the benchmark federal funds rate, which has been held near zero since December 2008. Outside the Fed, liberal lawmakers and some of the world’s top economists are urging her not to move too fast, for fear that the economy is weaker than it seems. Payrolls climbed by 211,000 last month following a 298,000 gain in October that was larger than previously estimated, Labor Department figures showed Friday. The clear message from the labour market to the Fed is: ‘Just do it!’” said Harm Bandholz, chief US economist at UniCredit Research in New York.
She has also clashed, sometimes acrimoniously, with conservatives trying to rein in her power, while several Republican presidential candidates have slammed her record on the campaign trail. VIENNA (AP) — OPEC nations decided Friday to keep producing oil at their current high levels, effectively acknowledging their inability to push up crude prices. For the 12 months that ended Nov. 30, hourly wages are up 2.3 percent, well above the low inflation rate. “The November report ensures that the Fed will move at the December meeting,” said economist Douglas Holtz-Eakin, president of the conservative-leaning American Action Forum think tank.
Elsewhere, oil prices fell yesterday after news that OPEC was planning to maintain its production near record highs despite depressed prices, as the producer group continued to guard its share of an oversupplied market. Instead, the organization’s endorsement of present output, which is more than 1.5 million barrels a day above the formal ceiling of 30 million barrels, is likely to push the price of oil down further.
Bullard later told the audience during a question and answer session that the FOMC has said the pace of policy tightening after liftoff will be gradual “and I think you have to take the committee at its word.” “My main concern about post-liftoff monetary policy is that it not be mechanical the way it was from 2004-2006. OPEC’s Secretary General Abdullah al-Badri said the group was unable to agree on a production ceiling, in part because it was unclear how much oil Iran would export next year when sanctions are lifted. In that sequence, we raised the policy rate 25 basis points at each meeting for 17 meetings in a row,” he said. “It turned out to be a global macro-economic disaster in the end.
Yesterday’s announcement sent ripples through wider markets, but losses in oil futures were limited as prices hit key support levels around $40 a barrel. She declined to comment for this article, but documents and interviews with more than 20 associates reveal how Yellen is trying to navigate this challenging moment.
Her goal is to forge consensus within the Fed while being responsive to Capitol Hill’s critiques — all without hampering the policies that she says has helped keep the U.S. economy on course. “I don’t think we know the kind of stress that she feels,” said Laurence Meyer, founder of Macroeconomic Advisers and one of Yellen’s former Fed colleagues. But Yellen cautioned that they would not be swayed by any single economic report and instead would look at the jobs data in the context of underlying trends.
The wild swings in global financial markets over the summer were potentially bad omens for China’s economy — which in turn could drag down America, she feared. So the ECB’s decision to provide only a small amount of stimulus means central banks in neighbouring countries may not have to scramble to catch up with rate cuts of their own. BANGKOK (AP) — Thailand, once a poster child for democracy and freedom in turbulent Southeast Asia, has careened over the past two years from one image disaster to the next.
A slim majority of the 17 people who make up the central bank’s top brass was willing to start pulling back the Fed’s support for the recovery in September. The trade deficit, the difference between exports and imports, widened 3.4 per cent in October to $43.9 billion, compared to a revised $42.5 billion deficit in September. Exports of goods and services fell 1.4 per cent to $184.1 billion while exports of just goods dropped an even bigger 2.4 per cent to $123.8 billion, the lowest level since June 2011.
ALBANY, N.Y. (AP) — New York’s comptroller plans to shift domestic stock holdings in the state retirement fund to companies with lower carbon emissions in a new $2 billion index. It includes another $1.5 billion going separately into so-called “sustainable investments,” doubling that program, and raising its total combined commitments to $5 billion, Comptroller Thomas DiNapoli said. The index will reduce or eliminate investments in companies that are large contributors to carbon emissions, such as those in the coal mining industry, he said. NEW YORK (AP) — Chipotle warned Friday that an outbreak of E. coli linked to its restaurants is hurting its sales and warned that if recent trends continue, it expects earnings for the current quarter to come in way below analysts’ prediction. The Centers for Disease Control and Prevention had said Friday that seven additional people were sickened, including in three more states — Illinois, Maryland and Pennsylvania.
The Food and Drug Administration granted a subsidiary of Indian drugmaker Sun Pharmaceutical Industries Ltd. approval to sell generic Gleevec, known as imatinib mesylate, in 100-milligram and 400-milligram pills for chronic myeloid leukemia. Former central bank chairman Alan Greenspan employed a top-down approach to the Fed’s decisions, making his opinions known before asking for input from his colleagues. WASHINGTON (AP) — Chicken of the Sea and Bumble Bee have called off their proposed merger after the Obama administration told the companies it would hurt competition in the U.S. canned tuna market. Former Philadelphia Fed President Charles Plosser, who often disagreed with Yellen, said her approach was “full bore.” “There was a fair amount of give and take, and I think they were healthy and good discussions,” Plosser said. “Sometimes at the end of the day, you agree to disagree, but that’s okay.” Rep. In a letter issued just days before the House vote, she criticized a provision that would require the Fed to follow prescribed rules in setting interest rates as “misguided.” The Fed won the backing of the White House, which threatened to veto the bill.
Yellen initially struggled to navigate the often-thorny relationship between Congress and the Fed, miffing Hensarling when she did not immediately reach out to him after being appointed to lead the Fed, according to a person with direct knowledge. Yellen has since stepped up her outreach to Republican lawmakers and has spoken directly with Hensarling over the phone about the investigation into the alleged leak. But the political climate for the Fed could become more toxic if a Republican moves into the Oval Office. “Janet Yellen, for political reasons, is keeping interest rates so low that the next guy or person who takes over as president could have a real problem,” GOP front-runner Donald Trump recently told Bloomberg Television. In a speech at the University of Massachusetts at Amherst, Yellen explained why she still has faith in the Fed’s models of the economy — and why the time to raise rates is sooner, rather than later. Unsurprisingly, the theme of her remarks was the importance of hard work — or what she called “grit.” “One aspect of grit that I think is particularly important is the willingness to take a stand when circumstances demand it,” Yellen told the crowd. “Such circumstances may not be all that frequent, but in every life, there will be crucial moments when having the courage to stand up for what you believe will be immensely important.”