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"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said. Republicans focused on whether energy policy was restricting supply and keeping prices higher than needed, and whether restrained federal spending could help the Fed's cause. As of December, officials saw that rate rising to a peak of around 5.1%, a level investors expect may move at least half a percentage point higher now. With a 50-basis-point rate hike now in play, Brown said a strong monthly jobs report on Friday would likely lead to "calls for a 6% terminal rate," nearly a percentage point higher than Fed officials had projected as of December. How much remains unclear, but Powell said the focus will remain more squarely on how inflation behaves.

"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said. The Fed's benchmark overnight interest rate is currently in the 4.50%-4.75% range. Senator Sherrod Brown, the Democratic chair of the committee, said the Fed's rate hikes ignored what he viewed as a chief cause of inflation - high corporate profits. "To restore price stability, we will need to see lower inflation in this sector, and there will very likely be some softening in labor market conditions," Powell said. Powell's last monetary policy report to Congress was in June, which was early in what became the most aggressive cycle of Fed rate increases since the 1980s.

☆ Fed's Powell sees long-term damage if US debt ceiling not raised
▼ + stars: | 2023-03-07 | by ( Michael S. Derby | ) www.reuters.com time to read: +1 min

NEW YORK, March 7 (Reuters) - The United States risks long-term damage if Congress does not raise the national debt ceiling, Federal Reserve Chair Jerome Powell said on Tuesday. Republicans, who control the U.S. House of Representatives, want to withhold a debt limit increase until Democrats agree to deep spending cuts. Democrats say the debt limit should not be "held hostage" to Republican tactics over federal spending. A debt ceiling showdown in 2011 roiled markets and led to a downgrade by credit ratings agency Standard & Poor's. Reporting by Michael S. Derby; Additional reporting by Lindsay Dunsmuir; Editing by and Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

☆ Fed should look at how to efficiently support markets in times of stress -Bowman
▼ + stars: | 2023-03-03 | by ( ) www.reuters.com time to read: +1 min

March 3 (Reuters) - The Federal Reserve should consider how to most efficiently support financial markets in times of strained liquidity using information it has gleaned from its interventions at the onset of the COVID-19 pandemic, Fed Governor Michelle Bowman said on Friday. The U.S. central bank should explore how "to minimize the Fed's footprint and amount of asset purchases needed to restore market functioning" in times of severe stress, Bowman said in prepared remarks at a conference organized by the University of Chicago Booth School of Business at which she was moderating a panel on market dysfunction in global financial markets. Bowman did not comment on her outlook for the U.S. economy or monetary policy in her brief speech. The Fed's targeted purchase of affected assets to quickly support financial market functioning, as occurred in Treasury markets in the spring of 2020, also meant "a key issue for central banks to consider is how to clearly distinguish asset purchases from the central bank’s monetary policy actions," Bowman added, as well as how to communicate an exit strategy to reduce the resulting enlarged balance sheet over time. Reporting by Lindsay Dunsmuir; Editing by Andrea RicciOur Standards: The Thomson Reuters Trust Principles.

☆ U.S. mortgage interest rates remain at highest level since November - MBA
▼ + stars: | 2023-03-01 | by ( ) www.reuters.com time to read: +1 min

The average contract rate on a 30-year fixed-rate mortgage increased by 9 basis points to 6.71% for the week ended Feb. 24, data from the Mortgage Bankers Association (MBA) showed on Wednesday, a third weekly rise in mortgage rates after several weeks of declines. The yield on the 10-year Treasury note acts as a benchmark for mortgage rates. The rise in mortgage rates meant fewer would-be purchasers. The MBA's Market Composite Index, a measure of overall mortgage loan application volume, fell 5.7% from a week earlier. The MBA's Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, declined 5.6% from the prior week.

"It's going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%." She is among the minority of Fed policymakers who back in December thought they would need to lift the policy rate to 5.4% to stop inflation, while most believed 5.1% would suffice. Similarly none of the other Fed policymakers who spoke Friday, including the normally hawkish Governor Christopher Waller and St. Louis Fed President James Bullard, focused on the fresh inflation data to argue for a more muscular Fed response, though all continued to signal more rate hikes would be required. And traders largely erased what had been consistent bets on Fed rate cuts towards the end of the year, pricing in a year-end Fed policy rate of 5.26%. "It looks like the Fed will have to be more aggressive," said Yelena Shulyatyeva, an economist at BNP Paribas.

☆ Fed's Mester sticks with December interest rate projection for now
▼ + stars: | 2023-02-24 | by ( ) www.reuters.com time to read: +1 min

Feb 24 (Reuters) - Cleveland Federal Reserve President Loretta Mester said on Friday that she was keeping to her previous forecast made at the end of last year for the U.S. central bank's interest rate peak as economic data since then has not caused her to change her mind. "I had my funds rate a little bit above the median in that projection, and I haven't really seen much change in my outlook for the economy since that time," Mester said in an interview with broadcaster CNBC. "So I see that we're going to have to bring interest rates above 5%...I do think we need to be somewhat about 5% and hold there for a time in order to get inflation on that sustainable downward path." Mester was speaking before inflation data was published which showed price pressures accelerating once again, causing investors to bet the Fed will raise interest rates at least three more times. Reporting by Lindsay Dunsmuir; Editing by Jane Merriman and Andrea RicciOur Standards: The Thomson Reuters Trust Principles.

☆ Bullard calls on Fed to get inflation under control this year
▼ + stars: | 2023-02-22 | by ( ) www.reuters.com time to read: +1 min

Feb 22 (Reuters) - The Federal Reserve needs to get inflation on to a sustainable path down toward its 2% goal this year or else risk a repeat of the 1970s, when interest rates had to be repeatedly ratcheted up, St. Louis Fed President James Bullard said on Wednesday. "If inflation doesn't start to come down, you risk this replay of the 1970s where you had 15 years where you're trying to battle the inflation drag," Bullard told broadcaster CNBC in an interview. "... That's why I've said let's be sharp now, let's get inflation under control in 2023 and it's a good time to fight inflation because the labor market is still strong." Bullard also repeated his view that a Fed policy rate in the range of 5.25% to 5.5% would be adequate for the task. Reporting by Lindsay Dunsmuir; editing by John Stonestreet and Chizu NomiyamaOur Standards: The Thomson Reuters Trust Principles.

☆ U.S. mortgage interest rates jump to highest level since November - MBA
▼ + stars: | 2023-02-22 | by ( ) www.reuters.com time to read: +2 min

That has caused a spike in U.S. Treasury yields, and a second straight weekly increase in mortgage rates after several weeks of declines. The yield on the 10-year note acts as a benchmark for mortgage rates. The renewed rise on mortgage rates caused more potential buyers to sit on the sidelines. The MBA's Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, dropped 18.1% from the prior week to its lowest level since 1995. The MBA's Market Composite Index, a measure of overall mortgage loan application volume, also declined 13.3% from a week earlier.

☆ U.S. household debt jumps to $16.90 trillion
▼ + stars: | 2023-02-16 | by ( Lindsay Dunsmuir | ) www.reuters.com time to read: +3 min

Feb 16 (Reuters) - U.S. household debt jumped to a record $16.90 trillion from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday. Household debt, which rose by $394 billion last quarter, is now $2.75 trillion higher than just before the COVID-19 pandemic began while the increase in credit card balances last December from one year prior was the largest since records began in 1999, the New York Fed's quarterly household debt report also said. Mortgage debt increased by $254 billion to $11.92 trillion at the end of December, according to the report, while mortgage originations fell to $498 billion, representing a return to levels last seen in 2019. Meanwhile credit card balances increased by $61 billion in the fourth quarter while auto loan balances rose by $28 billion, the report said. However, younger borrowers appear to be struggling more to make repayments for both credit card and auto loans.

The decision, announced after financial markets closed, gives Biden a pair of trusted Washington insiders to steer economic policy as the risk of recession fades but inflation lingers. Big fights also loom with the Republican-controlled House of Representatives over raising the debt ceiling. The shakeup comes as the White House tries to tackle what officials view as a frustrating disconnect between relatively strong economic data and weak public sentiment. The White House has refused to discuss spending cuts without a debt ceiling vote first. Bernstein last week conceded that the White House's early description of inflation as "transitory" had missed the mark.

The Fed's policy rate is currently in a 4.50%-4.75% target range. By the Fed's preferred measure, inflation is still running at a 5.0% annual rate. Harker last week flagged the prospect of rate cuts in 2024 should inflation continue to ease. However, following the CPI release on Tuesday, traders of interest rate futures now see the Fed raising borrowing costs three more times, bringing the policy rate to the 5.25%-5.50% range by July, if not June. "My own view is that, given the risks, we shouldn't lock in on a peak interest rate or a precise path of rates," she said.

☆ Fed's Barkin says inflation risks still outweigh others
▼ + stars: | 2023-02-14 | by ( ) www.reuters.com time to read: +2 min

"It's about as expected," Barkin said of the report as he cautioned that it will take a while for inflation to get back down near the Fed's 2% goal. By the Fed's preferred measure, inflation is still running at a 5.0% annual rate. "Inflation is normalizing but it's coming down slowly," Barkin said. "I just think there's gonna be a lot more inertia, a lot more persistence to inflation than maybe we'd all want." "If inflation settles, maybe we don't go quite as far but if inflation persists at levels far above our target then maybe we'll have to do more," he said.

☆ Factbox: Some potential successors to Brainard at the Fed
▼ + stars: | 2023-02-14 | by ( ) www.reuters.com time to read: +6 min

Meanwhile, analysts and Fed observers are already swapping notes on potential replacements for Brainard at the Fed from a bench of economists aligned with Biden's Democrats, who control the U.S. Senate. MARY DALYDaly is president of the San Francisco Fed, ascending to that position in 2018 after 22 years at the regional Fed bank, including a stint as its director of research. Furman has been a prominent, Twitter-savvy commentator on macroeconomic and Fed policy. He has a PhD from the University of Virginia and served as a Fed economist for a little over a year in the mid-1990s. With a PhD from Stanford University, he's held staff positions at the Fed board and the San Francisco Fed, where he also served as president before moving to the New York Fed role in 2018.

Feb 14 (Reuters) - U.S. President Joe Biden is expected to name Federal Reserve Vice Chair Lael Brainard as his top economic policy adviser as early as Tuesday, a source familiar with the matter said, as the 2024 elections approach. Brainard, an experienced fiscal and monetary affairs official, would replace White House National Economic Council (NEC) Director Brian Deese, who has announced his resignation. In addition, Biden confidant Jared Bernstein is expected to replace Cecilia Rouse as chair of the Council of Economic Advisers, the source said. The White House declined to comment. Biden's overhaul of his top economic team comes as the Fed is still trying to glide inflation down without causing a recession.

☆ Fed's Bowman says more interest rate hikes needed to tame inflation
▼ + stars: | 2023-02-13 | by ( ) www.reuters.com time to read: +1 min

Feb 13 (Reuters) - The Federal Reserve will need to continue to raise interest rates in order to get them to a level high enough to bring inflation back down to the central bank's target rate, Fed Governor Michelle Bowman said on Monday. The Fed's benchmark overnight lending rate is currently in the 4.50%-4.75% range. Once at a sufficiently restrictive level, interest rates will then need to be held for "some time" to restore price stability, Bowman said without offering specifics on the rate peak she would like to see. By the Fed's preferred measure, inflation is still running at a 5% annual rate. Bowman also said that a very strong labor market alongside moderating inflation meant a so-called economic 'soft landing' remains possible.

☆ Moving Fed policy rate to 5.00%-5.25% this year seems reasonable, Williams says
▼ + stars: | 2023-02-08 | by ( Michael S. Derby | ) www.reuters.com time to read: +2 min

Moving to a federal funds rate of between 5.00% and 5.25% "seems a very reasonable view of what we'll need to do this year in order to get the supply and demand imbalances down," Williams said at a Wall Street Journal event. Williams' comments were his first since the Fed's decision last week to moderate the pace of its rate rise campaign. On Wednesday, Williams said it is key for monetary policy to get to and stay at levels that will restrain growth for a few years. He added that his expectations of future Fed rate cuts are driven mostly by a need to respond to the likelihood of lower levels of inflation in the future. Williams said the prospect of a lower federal funds rate next year is driven mostly by monetary policy adjusting to a weaker inflation environment.

"We didn't expect it to be this strong," Powell said, but it "shows why we think this will be a process that takes quite a bit of time." It has just confounded all sorts of attempts to predict," Powell said, noting that wage growth has slowed even with continued strong job gains. Officials raised the target interest rate a quarter point to a range between 4.5% and 4.75% at that session, and said in the latest policy statement that "ongoing increases" would be needed. 1 2 3 4 5As of December, the Fed's preferred measure of inflation was increasing at a 5% annual rate, still more than double the Fed's target. While Powell said he expected "significant declines in inflation" this year, the U.S. economy was still "in the beginning of getting that down."

"It tells me that so far, we're not seeing much of an imprint ... on the labor market," Kashkari said. Bond yields have rocketed higher and interest rate futures markets now are squarely priced for a federal funds rate reaching at least 5.1%. LABOR MARKET CONCERNSOn Monday, Atlanta Fed President Raphael Bostic was one of those who said the central bank may need to lift borrowing costs higher than previously anticipated given the job gains. "We've seen no progress so far, virtually no progress in core services ex housing, and that's very tied to the labor market." Reporting by Lindsay Dunsmuir; Editing by Andrew Heavens, Chizu Nomiyama, Andrea Ricci and Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

☆ Fed's Kashkari sticks to 5.4% rate hike view after 'surprising' jobs report
▼ + stars: | 2023-02-07 | by ( Lindsay Dunsmuir | ) www.reuters.com time to read: +2 min

"I think it surprised all of us," Kashkari said in an interview with broadcaster CNBC, referring to a blowout January jobs report in which more than half a million employment gains were reported by the U.S. government. Fed Chair Jerome Powell is due to speak later on Tuesday at 1240 EST (1740 GMT). Last week the U.S. central bank increased its benchmark overnight lending rate by a quarter-of-a-percentage-point to 4.5%-4.75%. Powell reiterated expectations that the Fed was eyeing a pause in the 5%-to-5.25% range as sufficiently restrictive in its fight against high inflation. January's jobs report, however, upended investor expectations after the U.S. economy added far more jobs than expected and the unemployment rate fell to 3.4%, the lowest reading since 1969.

☆ Fed's Kashkari says he's sticking to 5.4% rate hike view after 'surprising' jobs report
▼ + stars: | 2023-02-07 | by ( ) www.reuters.com time to read: +1 min

"I think it surprised all of us," Kashkari said in an interview with broadcaster CNBC, referring to a blowout January jobs report in which more than half a million employment gains were reported by the U.S. government. "Nobody should overreact to one report...but the underlying strength of the services sector of the economy is still very robust. And that's where I think a lot of us are focusing our attention... right now I'm still at around 5.4%. If I had to pick a number today, that would be where I was." Reporting by Lindsay Dunsmuir; Editing by Andrew HeavensOur Standards: The Thomson Reuters Trust Principles.

☆ Fed seen hiking policy rate above 5% as hiring surges
▼ + stars: | 2023-02-03 | by ( ) www.reuters.com time to read: +2 min

Feb 3 (Reuters) - The U.S. Federal Reserve is likely to need at least two more interest-rate hikes, lifting the benchmark rate to above 5%, to slow an unexpectedly strong labor market seen as contributing to high inflation. The Fed earlier this week increased its benchmark rate by a quarter-of-a-percentage-point to 4.5%-4.75%. Interest-rate futures prices, initially skeptical of that view, now reflect that expectation, with a better than even chance seen that the Fed will continue get its policy rate to the 5%-5.25% range by June, if not by May. The Fed targets 2% inflation, now running at 5% by the Fed's preferred measure, the personal consumption expenditures price index. Friday's Labor Department report did show slower growth in average hourly earnings to a 4.4% pace, from an upwardly revised 4.8% in December.

"It's going to take some time" for disinflation to spread through the economy, Powell said in a news conference following the Fed's latest quarter-point interest rate increase. He said he expects a couple more rate hikes still to go, and, "given our outlook, I just I don't see us cutting rates this year." Rate cuts, they expect, will start in September - a view Powell said Wednesday is driven by the expectation of fast-receding inflation. Since the 1990s, the interlude between rate hikes and rate cuts has varied from as long as 18 months in 1997-1998 to as short as five months in 1995. The Fed, Powell said Wednesday, cannot risk doing too little.

REUTERS/Kevin LamarqueWASHINGTON, Feb 1 (Reuters) - U.S. President Joe Biden is still weighing candidates for new top economic advisers, officials familiar with the process said, and no final decisions are expected before next week's State of the Union speech. Biden is focused on Tuesday's address to Congress and had not made a decision on the top jobs at the National Economic Council (NEC) and the Council of Economic Advisers (CEA), officials said. Other candidates for the NEC job include Deputy Treasury Secretary Wally Adeyemo and Commerce Secretary Gina Raimondo, Reuters reported last week. Only the CEA job requires Senate confirmation. Brainard was widely floated as the frontrunner for Treasury secretary when Biden came to office, only for him to pick Yellen instead.

In France, the bloc's second-biggest economy, factory activity returned to growth albeit not as strongly as initially forecast. In Asia, factory activity contracted in January as the boost from China's COVID reopening had yet to take full effect. China's factory activity shrank more slowly in January after Beijing lifted tough COVID curbs late last year, a private sector survey showed. China's Caixin/S&P Global manufacturing (PMI) nudged up to 49.2 in January from 49.0 in December, staying below the 50 mark for a sixth straight month. Factory activity expanded in January in Indonesia and the Philippines but shrank in Malaysia and Taiwan, PMI surveys showed.

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