Archive | US

Trump wants to slash housing support by 18%

Supporters of the homeless & low-income families in the US are aghast at proposals in President Donald Trump’s budget which would slash Housing & Urban Development Department (HUD) funding by 18.3% – $US8.8 billion.

The HUD budget cuts are based on 2 themes:

  • Encouraging work & self-sufficiency, and
  • Switching federal funding to state & local governments and the private sector.

This is how it’s expressed in the budget document: “The budget reflects the president’s commitment to fiscal responsibility by reforming programmes to encourage the dignity of work & self-sufficiency while supporting critical functions that provide assistance to vulnerable households. The budget recognises a greater role for state & local governments and the private sector to address community & economic development needs & affordable housing production.”

In short, the Trump scheme is to stop federal debt rising – US public debt has gone past $US20.6 trillion, now that the debt ceiling has been removed – by handing liability to others, or canning functions altogether. Principally, those abandoned or altered functions seem to affect the most vulnerable.

Affordable Housing Finance deputy editor Donna Kimura outlined the housing changes in the Trump budget on Monday, saying it called for the elimination of several key housing programmes:

“Once again, the administration calls for terminating the popular community development block grant (CDBG) & HOME programmes. The proposal also seeks to end the Choice Neighbourhoods programme as well as the National Housing Trust Fund.

“The White House called for many of the same cuts last year, but the programmes were ultimately funded by Congress.”

Ms Kimura quoted David Dworkin, president & chief executive of non-partisan affordable housing advocate the National Housing Conference: “The best thing one can say about this budget is that it is dead on arrival. This budget is bad policy & bad politics. It undermines years of public-private investments in housing & community development that have had broad bipartisan support, like the CDFI Fund & block grant funding for neighbourhood redevelopment. It even cuts the Capital Magnet Fund & National Housing Trust Fund, which aren’t even paid for by taxpayers.”

Ms Kimura wrote that the budget sought no funding for the public housing capital fund, which had had nearly $US2 billion in funding in recent years. Instead, the proposal is to merge the public housing capital fund into the public housing operating fund, reducing funding overall.

Links:
Affordable Housing Finance, 12 February 2018: White House proposes to slash HUD programmes
Trump budget proposal (HUD section at p63)

Attribution: Affordable Housing Finance, Trump budget proposal.

Continue Reading

Fed holds rate, no mention of debt programme

The US Federal Reserve’s open market committee decided overnight to hold its target range for the federal funds rate at 1.25-1.5%.

While pundits are forever predicting precise dates for increases in the rate, the committee closed today’s release with a statement roughly equating to “time will tell”: “The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

The committee lifted the rate in December by a quarter percent from the level set in June. It made no mention of reducing its debt mountain.

The committee outlined its “normalisation programme” last June and issued a one-liner on progress in November: “The balance sheet normalisation programme initiated in October is proceeding.”

Background to “normalisation”

In its June release, the committee said it was “maintaining its existing policy of reinvesting principal payments from its holdings of agency debt & agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.

“The committee currently expects to begin implementing a balance sheet normalisation programme this year, provided that the economy evolves broadly as anticipated. This programme… would gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal payments from those securities.”

The normalisation programme has 2 parts to it, as outlined in June:

  • For payments of principal that the Federal Reserve receives from maturing Treasury securities, the committee anticipates that the cap will be $US6 billion/month initially and will increase in steps of $US6 billion at 3-month intervals over 12 months until it reaches $US30 billion/month.
  • For payments of principal that the Federal Reserve receives from its holdings of agency debt & mortgage-backed securities, the committee anticipates that the cap will be $US4 billion/month initially and will increase in steps of $US4 billion at 3-month intervals over 12 months until it reaches $US20 billion per month.

On that basis, the total reduction should now be $US10 billion/month.

According to the US Debt Clock website, US public debt has reached $US20.6 trillion and treasury securities total $US1.18 trillion.

Yellen’s last call

The 31 January meeting was the last for Janet Yellen, 71, who handed in her notice as a member of the board of governors in November. Jay (Jerome) Powell, 64, will replace her as chair when he is sworn in on Monday.

Link: US Debt Clock

Attribution: Fed release.

Continue Reading

Surveying the international influences

On the one hand Donald Trump, as a disruptive US president trying to change the order of life in his country’s public services, and simultaneously in its trade with the rest of the world.

On the other, bands of nations working towards new economic alliances, often with religious overlays.

In between, the moneymen of Davos, happy to keep state-funded neoliberalism alive & in good heart.

Hanging over the whole scene, a growing mountain of debt which has theoretically lifted economies over the decade since the global financial crisis began but which nobody feels too inclined to reduce to a manageable level.

The world at peace & harmony, developing economically on well founded lines? Or the world at war, so every step forward is rewarded with a slash from angry opponents?

China sets new paths

As Mr Trump tries to reset the rules of trade combat further in his country’s favour, China has embarked on a journey which promises to establish very different trade routes, but with trouble ahead at various outposts on its One Belt One Road update of the old Silk Road & sea passage to Zanzibar.

Every time I look at international events to gauge how – or even whether – they might affect us in New Zealand, the picture shifts, new players emerge and old ones start playing different games. One of the surprises has been immediately west of us – a country where everyone believed for decades that it was impossible for the federal government to destroy the economy – but they did it!

Among the outcomes, for New Zealanders, is that the Australian job market tightened, Kiwis came home and others who would have gone overseas didn’t, pushing net immigration to record highs. Housing demand & supply in New Zealand was pushed further out of kilter than it had already been for the previous decade.

A change for the better in the Australian economy will bring changes in New Zealand – more emigration, the release of housing pressure, and renewed trade opportunities.

Further away – does it matter?

For the rest, does it matter? Or will NZ sail on, oblivious to the changing winds to the north?

I think those changing winds do matter, because they’re going to bring new trade openings, new migrant sources, new partnerships, and they will widen the range of potential investors in this country, which needs investment in the infrastructure to keep our cities moving and our rural economy productive.

Many opportunities along the Silk Road, but…

China looks intent on reviving the Silk Road, which should bring new investment – not just Chinese – to the stans of central Asia, notably Kazakhstan, Kyrgyzstan, Turkmenistan & Uzbekistan. Already, preparations for a combination of the land route across central Asia and the sea route to Africa are bringing new development to Pakistan. At the same time, religious fervour could cripple those opportunities.

Gansu Bank debuted on the Hong Kong stock market 2 weeks ago and its shares have taken off, Ben Kwok wrote in Monday’s Asia Times. The north-west Chinese province of Gansu is in the Silk Road corridor – so, poorer than most of China but changing times.

Asia Times, 29 January 2018: Gansu province poor but a strategic location in BRI

Controlling the zombies

In an Asia Times story yesterday, Gordon Watts picked up detail from a regular statistical release (seeing through the usual fawning language) that indicated China’s many “zombie enterprises”, often owned by local government or the state, “are being closed, merged or forced to slim down after being weaned off a diet of overproduction”.

That is a change that would have huge consequences, internally in the way production is carried out & counted, internationally in China’s trade relationships – including, for instance, the quality of steel it supplies.

Asia Times, 30 January 2018: China tries to breathe new life into corporate walking dead
18 January 2018, Chinese National Bureau of Statistics: National economy maintained the momentum of stable & sound development and exceeded the expectation

National security – or protectionism?

A third Asia Times story yesterday put US-China trade issues together. Citing a Bloomberg article on Monday, the Asia Times wrote about the possible move for the US Government & trusted US or foreign companies to build 5G networks, saying it could hit Chinese suppliers Huawei & ZTE, and the Global Times (a Chinese tabloid published under the auspices of the People’s Daily) criticised “hysteria” & “protectionism’ under the guise of national security.

“The Donald Trump administration is reported to be in talks with private companies to build a secure 5G network and rent out access to domestic telecom carriers due to concerns about Chinese firms & risks to cybersecurity, Bloomberg revealed on Monday, citing 2 anonymous US administration officials familiar with the plans,” the Asia Times story said.

The Asia Times was established in Bangkok in 1995, closed in 1997 days before the Asian financial crisis began to unfold, and is now based in Hong Kong and owned by Asia Times Holdings Ltd.

Asia Times, 30 January 2018: Chinese firms may face lock-out if Washington seals off 5G networks

Singapore now the big investor in US property

Again citing Bloomberg, the Asia Times noted yesterday: “For the first time since 2012, Singapore outspent China to be the largest Asian investor in US commercial property, as deals by Chinese investors plummeted amid a regulatory pressure from Beijing.”

Singaporean sovereign wealth fund GIC Pte Ltd accounted for almost 75% of the $US9.5 billion of deals.

Asia Times, 30 January 2018: Singapore outspends China on US property for first time in years

Redirecting trade policy

President Trump has been pushing hard for manufacturers who supply the US market, especially vehicle makers, to move production lines from Mexico to the US.

He tweeted on Sunday in praise of Fiat Chrysler: “Our economy is better than it has been in many decades. Businesses are coming back to America like never before. Chrysler, as an example, is leaving Mexico and coming back to the USA. Unemployment is nearing record lows. We are on the right track!”

Fiat Chrysler said it wasn’t shutting the assembly plant in Saltillo, Mexico, that currently builds the Ram heavy-duty trucks, but would use the plant to build commercial vehicles it will sell around the world. The company will spend $US1 billion upgrading its plant at Warren, Michigan, so it can produce these Ram trucks there.

CNN is one of the hardest-line US news outlets against the Trump presidency, but its own story indicates both sides of the argument are technically correct.

More importantly, the Christmas tax boost to corporates and the encouragement for them to take their overseas cash holdings home means more local production by US companies and either a change in production or a closedown for their plants elsewhere – unless foreign investors pick up the pieces.

Either way, the US – and Mr Trump in particular – is leading the direction of trade policy. Outfits like the Trans-Pacific Partnership, representing disparate interests, won’t easily combat that sort of confrontation.

CNN, 29 January 2018: No, Mr President, Chrysler isn’t leaving Mexico

And back to Australia

On the Australian MacroBusiness website, columnist David Llewellyn-Smith (Houses & Holes) wrote last week: “The rest of the world is increasingly seized by the notion of ‘global synchronised growth’ but Australia looks increasingly like the odd man out. How did it come to this?”

The answer was short: “It is all of our own doing. At each turn all we needed to do was to manage the real exchange rate & household debt.”

The brief article runs through some causes of the predicament.

Houses & Holes on MacroBusiness, 25 January 2018: Has Australia mismanaged itself out of a global boom?

Attribution: Asia Times, CNN, MacroBusiness.

Continue Reading

Fed lifts funds rate target

The US Federal Reserve’s open market committee has lifted its funds rate, raising the target range overnight to 1.25-1.5%, up a quarter percent from the level set in June.

The vote was 7-2. Fed chair Janet Yellen and her replacement in that role from February, Jerome Powell, both supported the raise.

As for followup, the release was typically vague.

The reasoning:

Information received since the Federal open market committee met in November indicates that the labour market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid and the unemployment rate declined further. Household spending has been expanding at a moderate rate and growth in business fixed investment has picked up in recent quarters.

On a 12-month basis, both overall inflation and inflation for items other than food & energy have declined this year and are running below 2%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the committee seeks to foster maximum employment and price stability. Hurricane-related disruptions and rebuilding have affected economic activity, employment & inflation in recent months but have not materially altered the outlook for the national economy. Consequently, the committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labour market conditions will remain strong.

Inflation on a 12‑month basis is expected to remain somewhat below 2% in the near term but to stabilise around the committee’s 2% objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely.

In view of realised & expected labour market conditions & inflation, the committee decided to raise the target range for the federal funds rate to 1.25-1.5%. The stance of monetary policy remains accommodative, thereby supporting strong labour market conditions and a sustained return to 2% inflation.

In determining the timing & size of future adjustments to the target range for the federal funds rate, the committee will assess realised & expected economic conditions relative to its objectives of maximum employment & 2% inflation. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures & inflation expectations, and readings on financial & international developments. The committee will carefully monitor actual & expected inflation developments relative to its symmetric inflation goal.

The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Earlier story:
15 June 2017: Fed lifts rate again

Attribution: Fed release.

Continue Reading

Fed holds rate, issues one-liner on its debt mountain

The US Federal Reserve’s open market committee decided overnight to hold its federal funds rate in the range of 1-1.25%.

It issued a one-liner on its debt reduction programme. You can check the background on that at the foot of this article.

The committee’s position, now fairly forlorn as its hope for an inflation rise keeps not happening, but with the jobs picture stronger as the unemployment rate strengthened by 0.2% in September to 4.2%: “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a sustained return to 2% inflation.”

Below is the committee’s full statement on the US economy:

“Information received since the committee met in September indicates that the labour market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions.

“Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. Gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food & energy remained soft.

“On a 12-month basis, both inflation measures have declined this year and are running below 2%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

“Consistent with its statutory mandate, the committee seeks to foster maximum employment & price stability. Hurricane-related disruptions & rebuilding will continue to affect economic activity, employment & inflation in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term.

“Consequently, the committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labour market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2% in the near term but to stabilise around the committee’s 2% objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely.

“In view of realised & expected labour market conditions & inflation, the committee decided to maintain the target range for the federal funds rate at 1-1.25%. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a sustained return to 2% inflation.

“In determining the timing & size of future adjustments to the target range for the federal funds rate, the committee will assess realised & expected economic conditions relative to its objectives of maximum employment & 2% inflation. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures & inflation expectations, and readings on financial & international developments.

“The committee will carefully monitor actual & expected inflation developments relative to its symmetric inflation goal. The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

“The balance sheet normalisation programme initiated in October is proceeding.”

Background to “normalisation”

In its June release, the committee said it was “maintaining its existing policy of reinvesting principal payments from its holdings of agency debt & agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.

“The committee currently expects to begin implementing a balance sheet normalisation programme this year, provided that the economy evolves broadly as anticipated. This programme… would gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal payments from those securities.”

The normalisation programme has 2 parts to it, as outlined in June:

  • For payments of principal that the Federal Reserve receives from maturing Treasury securities, the committee anticipates that the cap will be $US6 billion/month initially and will increase in steps of $US6 billion at 3-month intervals over 12 months until it reaches $US30 billion/month.
  • For payments of principal that the Federal Reserve receives from its holdings of agency debt & mortgage-backed securities, the committee anticipates that the cap will be $US4 billion/month initially and will increase in steps of $US4 billion at 3-month intervals over 12 months until it reaches $US20 billion per month.

On that basis, the total reduction should now be $US10 billion/month.

Links:
14 June 2017: Federal Reserve board & federal open market committee release economic projections from the June 13-14 FOMC meeting
FOMC issues addendum to the policy normalisation principles & plans

Attribution: Fed release.

Continue Reading

Fed holds rate after hurricanes, envisages treasuries selldown start next month

Hurricane damage beat job gains in the US Federal Reserve’s short-term economic assessment out today, and the central bank’s open market committee opted to keep its federal funds rate target range at 1-1.25%.

The bank gave 2 lines at the end of its summary to its treasuries selldown, which it said would start in October. The bulk of the statement issued today, though, is the usual blather.

I’ve also linked below to the Fed’s economic projections, out today, but haven’t written about them.

Here’s how the bank expressed its assessment, leading to a 9-0 vote:

“Information received since the committee met in July indicates that the labour market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have remained solid in recent months and the unemployment rate has stayed low. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters.

“On a 12-month basis, overall inflation and the measure excluding food & energy prices have declined this year and are running below 2%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

“Consistent with its statutory mandate, the committee seeks to foster maximum employment & price stability. Hurricanes Harvey, Irma & Maria have devastated many communities, inflicting severe hardship.

Storms only a short-term delay

“Storm-related disruptions & rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labour market conditions will strengthen somewhat further.

“Higher prices for gasoline & some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2% in the near term but to stabilise around the committee’s 2% objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely.

“In view of realised & expected labour market conditions & inflation, the committee decided to maintain the target range for the federal funds rate at 1-1.25%. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a sustained return to 2% inflation.

“In determining the timing & size of future adjustments to the target range for the federal funds rate, the committee will assess realised & expected economic conditions relative to its objectives of maximum employment & 2% inflation. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures & inflation expectations, and readings on financial & international developments.

“The committee will carefully monitor actual & expected inflation developments relative to its symmetric inflation goal. The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Treasuries selldown programme

“In October, the committee will initiate the balance sheet normalisation programme described in the June 2017 addendum to the committee’s policy normalisation principles & plans.”

In the June statement, the committee anticipated an initial cap of $US6 billion/month in treasury repayments, rising in $US6 billion steps at 3-month intervals over 12 months until it reaches $US30 billion/month.

For payments of principal that the Fed receives from its holdings of agency debt & mortgage-backed securities, the committee anticipated in June that the cap would be $US4 billion/month initially and would increase in $US4 billion steps at 3-month intervals over 12 months until it reached $US20 billion/month.

Links:
Today: Federal Reserve Board & Federal open market committee release economic projections from the September 19-20 FOMC meeting
14 June 2017: FOMC issues addendum to the policy normalisation principles & plans

Attribution: Fed release.

Continue Reading

Fed lifts rate again

The US Federal Reserve decided overnight to raise its federal funds rate to a range of 1-1.25%.

The central bank dropped its target range to 0-0.25% in December 2008 and held it there for 7 years. In December 2015 it lifted the target range to 0.25-0.5%, and raised it again in December 2016 & March 2017, each time by 25 basis points.

One member of the bank’s open market committee, Federal Reserve Bank of Minneapolis president Neel Kashkari, wanted to hold the rate today. The vote to raise was 8-1.

The bank expects to start a “balance sheet normalisation programme” this year, by gradually decreasing reinvestment of principal payments to reduce its holdings of Treasury securities.

The committee said it expected economic conditions would “evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Attribution: Bank release.

Continue Reading

Fed holds funds rate

The US Federal Reserve’s open market committee stuck overnight to the 0.75-1% target range for its federal funds rate.

In its statement issued this morning, the US central bank said: “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a sustained return to 2% inflation.”

The committee said it would maintain its policy of reinvesting principal payments from its holdings of agency debt & agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, “and it anticipates doing so until normalisation of the level of the federal funds rate is well under way. This policy, by keeping the committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”

Link to full statement: Federal Reserve issues FOMC statement

Attribution: Bank release.

Continue Reading

Fed approves the anticipated raise

The US Federal Reserve did what was widely expected overnight, and raised its federal funds rate target range 25 basis points to 0.75-1% “in view of realised & expected labour market conditions & inflation”.

Its previous 25-point raise was in December.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, wanted no change. The other 9 members of the committee supported the raise.

The central bank’s open market committee said in its summary of economic conditions this morning:

“Information received since the federal open market committee met in February indicates that the labour market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. Inflation has increased in recent quarters, moving close to the committee’s 2% longer-run objective; excluding energy & food prices, inflation was little changed and continued to run somewhat below 2%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”

Looking ahead, the bank said: “The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

“The committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt & agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalisation of the level of the federal funds rate is well under way. This policy, by keeping the committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”

Attribution: Fed release.

Continue Reading

Fed holds funds rate, continues aiming for 2% inflation “goal”

The US Federal Reserve’s open market committee decided overnight to hold the target range for the federal funds rate at 0.5-0.75%, based on “realised & expected labour market conditions and inflation”.

The committee said: “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a return to 2% inflation.”

The committee increased its target rate by 0.25% in December.

One thing that surprises me about this pronouncement is that the Fed now calls 2% an “inflation goal”. It’s like a baseball player landing precisely on a base with both feet, whereas in economics the cycles are moving constantly – provided they’re not being manipulated, as they have been in the US since this millennium began.

The committee said it would continue to maintain its policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities, and of rolling over maturing Treasury securities at auction, “and it anticipates doing so until normalisation of the level of the federal funds rate is well under way. This policy, by keeping the committee’s holdings of longer-term securities at sizeable levels, should help maintain accommodative financial conditions.”

Link:
Federal Reserve, 2 February 2017: Federal Reserve issues FOMC statement

Attribution: Fed release.

Continue Reading
WordPress Appliance - Powered by TurnKey Linux