3 min readAbstract The almost comical sounding term “Operation Twist” has been creeping into the financial media since last December as Federal Reserve officials and market commentators discussed innovative ways to revive the stagnant economy. This phrase became a household name on September 21st, when the Federal Open Market Committee (FOMC) decided to simultaneously buy $400 billion…
1 min readAgainst a backdrop of declining US growth projections, all eyes were on the Fed last week as they considered new policy initiatives designed to impact the cost of borrowing. Under consideration was the QE3 balance sheet expansion, as well as more politically palatable options, such as reducing the interest rates paid on excess reserves held…
3 min readIntroduction How long does it take for “green shoots” to grow into a “soft patch”? For the U.S. economy, it has taken a little more than two years. In his famous 60 Minutes interview on March 15, 2009, Federal Reserve Chairman Ben Bernanke popularized the phrase “green shoots” to describe the growing confidence in the…
2 min readDespite record economic stimulus, and perhaps due to the waning of the stimulus programs, May’s economic data indicated a reversal in key expansion criteria. For example, non-farm payrolls, which had been trending in the 220,000 range for the previous three months, came in at 54,000 in May, far below the 180,000 level needed to maintain…
1 min readRecent Federal Reserve communication has set the stage for additional quantitative easing in November. Not so long ago, “Fed speak” was centered on future steps that the Fed may take to gradually remove stimulus. However, this recent shift in communication has pivoted around a deceleration in growth and declining inflation expectations in the market. While…
2 min readIntroduction With just two days remaining until the Federal Reserve Board’s key policy meeting, it is almost impossible to avoid the term “quantitative easing round two (QE2)” in the financial press. Ever since the keynote speech by Fed Chairman Ben Bernanke last August , rumors have been rampant that the Fed will implement a daring…
2 min readContinuous improvement in the U.S. economy is now leading the government to explore the exit strategies that will eventually wean the economy from the multitude of support programs enacted during the worst of the credit crisis. In Federal Reserve Chairman Ben Bernanke’s recent Humphrey Hawkins testimony, the Chairman went to great lengths to assure the…
2 min readFederal Reserve Chairman Ben Bernanke recently laid out his plans to lawmakers on how the Fed will eliminate programs, when needed, which pumped hundreds of billions of dollars into the financial system. In an op-ed piece for the Wall Street Journal, he wrote that the strategy is ready to be put to use, but noted…
3 min readExecutive Summary From administering aggressive interest rate cuts to providing longer-term liquidity to financial firms; from accepting non-traditional asset collateral to assisting the Bear Stearns takeover by JPMorgan Chase; this Federal Reserve is unlike any we have seen in recent history. By throwing out the rulebook of central banking, some pundits say the Fed sets…
2 min readExecutive Summary With 400 basis points of Fed Funds rate increases over the past 24 months, investors are rightfully anxious about the impact of the Fed tightening policy. Our study finds that historically falling core CPI data tends to encourage the Fed to stop raising rates. Other key indicators, however, do not seem to have…