In a speech calling for a host of policy actions to aid the housing market, a top Federal Reserve official also said Friday the central bank may have to provide more stimulus to help the economy.
Because the outlook for unemployment is unacceptably high relative to our dual mandate and the outlook for inflation is moderate, I believe it is also appropriate to continue to evaluate whether we could provide additional accommodation in a manner that produces more benefits than costs, regardless of whether action in housing is undertaken or not, Federal Reserve Bank of New York President William Dudley said.
He noted that as the Fed tries to aid the economy, and address the central role the weak housing market plays in impeding the recovery, the institution cannot go it alone. He said, monetary policy and housing policy are much more complements than substitutes.
bull;Checks can be mailed to or dropped off at 181 East Marine Corps Drive, Suite 207, Hagåtña, 96910. Make checks payable to the Ayuda Foundation. Include Sendong Relief on the checks memo line.
Guam Reef Hotel
bull;Donation boxes have been stationed in each of its restaurants, including Aliz#233;, Pala Pala Poolside BBQ, Sango, Top of the Reef and Sand Dune. Proceeds of the hotels nightly Christmas Caroling also will be donated to the victims of Typhoon Sendong.
American Red Cross, Guam Chapter
bull;The Guam Chapter of the American Red Cross is accepting monetary donations. Checks should be payable to American Red Cross Disaster Relief Fund, with the memo note Philippine disaster. Donations can be mailed to the Guam Red Cross, Bldg. 285, Route 4, Hagåtña, 96910.
Docomo Pacific
bull;Donate $1 by texting to 4236 (4CDO)
Filipino Community of Guam
bull;The Filipino Community of Guam is continuing to accept monetary donations and donations of non-perishable goods, clothing and other supplies until the end of the month. For more information, email FCG Public Relations Officer Mark A. Duarte at mduarte1972@gmail.com, or call FCG Board Chairman Emelio Uy at 646-6613 or 687-0725.
DIRECT DONATION
Those who want to donate directly to National Disaster Risk Reduction Management Council or the Department of Social Welfare and Development may do so by depositing their donations to the following accounts:
National Disaster Risk Reduction Management Council
bull;Bank name: Development Bank of the Philippines
bull;Account name: NDRRMC Donated Funds
bull;Account number: 0435-021927-130
bull;Swift code: DBPHPMM (account no. 36002016)
bull;Contact person: Rufina Pascual (Collecting Officer, Office of Civil Defense)
bull;Contact number: (632) 421-1920
Department of Social Welfare and Development
bull;Bank name: Land Bank of the Philippines (Batasan, Quezon City branch)
bull;If your community organization or business is holding a fundraising event to help victims of Typhoon Sendong (international name Washi), send your information to news@guampdn.com.
BLOEMFONTEIN, South Africa (Reuters) – The euro zone crisis could hurt South Africas economy and the country should maintain a supportive monetary policy to ensure growth in the medium term, the head of the International Monetary Fund said on Saturday.
Christine Lagarde, in South Africa as part of her first tour of the continent since taking the IMF post, said the African economic powerhouse would do well to also moderate wage growth.
Although well integrated into the global economy, South Africa mitigated the worst impact of 2008s recession through a sound macroeconomic regime, a strong financial sector and a flexible exchange rate, she said.
The ongoing difficulties in the euro area, one of South Africas main export markets, present significant downside risks to the economic outlook, Lagarde said in a statement after meetings with President Jacob Zuma and senior officials.
In this context, we agreed that the challenge now is to ensure that monetary policy remains supportive and competitiveness improves.
The country has lost about a million jobs in the past two years, positions analysts say will be difficult to reopen because unions have priced labour out of the market.
The average factory worker in South Africa earns about six times as much as a factory worker in China and is less efficient.
South Africa, along other emerging markets, is bearing the brunt of global risk aversion triggered by the euro zone crisis. Its rand currency fell nearly 23 percent against the dollar in 2011.
The US Federal Reserve on Tuesday said it would begin publishing forecasts on the path of interest rates later this month, a move that could suggest rates will be on hold for longer than previously expected.
The move is meant to better align bets in financial markets with the views of policymakers at the central bank and is a significant milestone in Ben Bernankes push for greater policymaking transparency.
The Fed has held the overnight federal funds rate close to zero since December 2008. In statements after its last four policy meetings, it has said it expected to keep rates ultra low until at least the middle of 2013.
But policymakers have chafed at a pledge that was both tied to the calendar and static, and many investors think rates will be on hold for even longer.
In minutes from its Dec. 13 meeting, released on Tuesday, the Fed said it will publish projections for the path of the federal funds rate along with its regular quarterly economic forecasts after its next meeting on Jan. 24-25. It also said officials would provide forecasts for the first rate hike.
The Fed believes that by publishing a projected path for short-term interest rates for the next few years and by also saying when it thinks rates will first be raised long-term interest rates will fall further, said Paul Dales, senior US economist for Capital Economics.
The minutes said a number of Fed officials believed economic conditions could well warrant a further easing of monetary policy, and that an enhanced communications framework could make any policy shift more effective.
However, a few others believed further stimulus would be a bad idea, a sign of the ongoing tussle at the central bank over whether the US economy needs more help.
At its December meeting, the Fed warned that turmoil from Europes debt crisis posed a major risk to the US economy and it left the door open to further steps to boost growth, even though it noted a somewhat stronger labor market.
Publishing rate path forecasts is likely to cool any financial market anticipation that modest improvements in the economy might mean a step by the Fed to tighten financial conditions could be drawing nearer.
Some officials worried the central banks current pledge that rates would stay ultra-low until at least the middle of 2013 might have to be adjusted before long, according to the minutes.
In publishing rate forecasts, the Fed is following the example of other central banks, including Sweden and Norway, and taking a step toward the greater policy transparency that Chairman Ben Bernanke had promised when he took office in 2006.
Policymakers last month also considered adopting a statement of their longer-run goals and strategy, a step analysts said could incorporate a formal inflation target.
However, it took no action and officials agreed to debate the subject further at their meeting later this month.
Federal Reserve Bank of St. Louis
President James Bullard said monetary policy has influenced
inflation and price expectations, even with the benchmark
interest rate near zero since December 2008.
“Stabilization policy should be left to the monetary
authority, which can operate effectively” with interest rates
near zero, Bullard said today in a speech in Chicago. By
contrast, the use of tax and spending changes to respond to
shocks in the economy over the short run “has run its course.”
Fed officials are divided over whether the central bank
should wait to see if the economy deteriorates before taking
additional steps to try cutting borrowing costs and boosting job
creation. The US economy is growing moderately amid “apparent
slowing” in global growth, with “some improvement in overall
labor market conditions,” Fed officials said last month. The
economy gained 200,000 payroll jobs in December and the
unemployment rate fell to 8.5 percent from 8.7 percent in
November, figures from the Labor Department showed yesterday.
“The turn toward fiscal approaches to stabilization has
run its course,” Bullard said in the text of slides prepared
for a speech to the Korea-America Economic Association. “Tax
and spending policy should be set for the medium and longer
term.”
Bullard, 50, who doesn’t vote on monetary policy this year,
was the first Fed official in 2010 to call for a second round of
asset purchases. He published a paper in 2010 entitled “Seven
Faces of the Peril,” which called on the Fed (FDTR) to avert deflation
by purchasing Treasury notes, a policy known as quantitative
easing.
Bank President
Bullard joined the St. Louis Fed’s research department in
1990 and became president of the regional bank in 2008. His
district includes all of Arkansas and parts of Illinois,
Indiana, Kentucky, Mississippi, Missouri and Tennessee.
The US consumer-price index increased 3.4 percent in the
12 months ended November, the smallest year-over-year increase
since April, a Labor Department report Dec. 16 showed. Excluding
volatile food and energy, the core CPI climbed 2.2 percent from
November 2010, the most since October 2008.
The Fed’s preferred price gauge, the Commerce Department’s
measure that excludes food and fuel and is tied to consumer
spending, was up 1.7 percent in the year ended in November, at
the lower end of Fed policy makers’ long-run projection of 1.7
percent to 2 percent.
To contact the reporters on this story:
Vivien Lou Chen in San Francisco at
vchen1@bloomberg.net;
Meera Louis in Washington at
mlouis1@bloomberg.net
To contact the editor responsible for this story:
Chris Wellisz at
cwellisz@bloomberg.net
Fed Should Fine Law-Defying Mortgage Servicers, Raskin Says January 10, 2012, 4:41 AM EST
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By Joshua Zumbrun and Alex Kowalski
(Updates with comment in ninth paragraph.)
Jan. 7 (Bloomberg) — Federal Reserve Governor Sarah Bloom Raskin said the central bank should fine mortgage servicing companies that broke the law and are partly to blame for the current “foreclosure crisis” in U.S. housing.
“The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law,” Raskin said in a speech today in Washington. “The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties,” she said.
The Fed in April initiated formal enforcement actions against 10 banking organizations to address a “pattern of misconduct and negligence” in mortgage loan servicing and foreclosure processing.
“One purpose of monetary penalties, when they are appropriately sized, is to incentivize mortgage servicers to incorporate strong programs to comply with laws when they build their business models,” Raskin said. “This is an operational purpose, but as mentioned earlier, monetary penalties also remind regulated institutions that non-compliance has real consequences.”
The 10 institutions the Fed announced enforcement actions against included Bank of America Corp., Citigroup Inc., Ally Financial Inc., HSBC North America Holdings, Inc., JPMorgan Chase & Co., MetLife, Inc., PNC Financial Services Group, Inc., SunTrust Banks, Inc., U.S. Bancorp, and Wells Fargo & Co.
Weak Economy
The inability to process foreclosures has damaged an economy so weak that the unemployment rate has remained above 8 percent for nearly three years, Raskin said.
“Home mortgage foreclosures hurt the pace of an economic recovery,” Raskin said, and “the severe misconduct that has been uncovered in the mortgage servicing sector” should “be addressed through intensified public enforcement of the law as part of the overarching effort to rebuild our damaged communities and neighborhoods.”
Mortgage servicers collect mortgage payments, negotiate modifications to loans, and initiate foreclosures.
Raskin said she encourages policy makers to think “through imaginative and creative ways to put an appropriate response together” to eliminate practices that triggered the housing crisis. Monetary penalties and corrective claims are just some of the possible responses, she said, responding to audience questions.
‘Cookie Cutter’
“We don’t and we are not approaching this in such a way that the remedies become a cookie cutter,” Raskin said. “The purpose of enforcement action is to tailor the problem, to fix the problem and to make sure that it doesn’t happen again.”
Raskin told a group of bankers yesterday that the Fed’s monetary policy actions have been well-suited to address the weak economy.
“Our deployment of unconventional policy tools has been completely appropriate to help promote the Federal Reserve’s statutory mandate of maximum employment and price stability,” said Raskin, 50, who was Maryland’s chief banking regulator before her appointment to the Fed in 2010.
The Labor Department said yesterday that payrolls rose by 200,000 last month, more than economists forecast.
Raskin’s remarks follow comments yesterday by three Fed policy makers backing additional action to aid the housing market. New York Fed President William C. Dudley, in a New Jersey speech, called on the U.S. government to try new programs to revive the housing market while saying the central bank may still consider ways to cut interest rates.
Boston Fed President Eric Rosengren, speaking in Connecticut, said Fed purchases of additional mortgage-backed securities “would in my view help provide a more rapid recovery in housing” and Fed Governor Elizabeth Duke said in Richmond, Virginia, that “forceful and effective housing policies have the potential to significantly influence the speed and strength of our economic recovery.”
–Editors: James Tyson, Kevin Costelloe
To contact the reporter on this story: Joshua Zumbrun in Washington at jzumbrun@bloomberg.net Alex Kowalski in Washington at akowalski13@bloomberg.net;
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Hungary Is Willing to Accept Any IMF Credit Line, Orban Says January 08, 2012, 7:12 PM EST
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Hungary’s Orban Willing to Compromise in Dispute With EU
Orban May Cooperate in EU-Hungary Dispute, Barroso Says
Hungary Runs Out of Options as Orban Bonds Routed in IMF Row
By Edith Balazs
(Updates with more Orban comments from fourth paragraph, markets in sixth.)
Jan. 8 (Bloomberg) — Hungarian Prime Minister Viktor Orban abandoned all previous objections to a bailout from the International Monetary Fund, indicating his government was open to “any kind” of credit line to prop up financing.
“As far a we’re concerned, there’re no preconditions during negotiations, all issues that the involved parties deem necessary can be debated,” Orban said in an interview with state news service MTI today. Tamas Fellegi, the country’s chief negotiator in aid talks, has a mandate to accept “any kind” of credit line that strengthens the country’s market financing, Orban said.
The IMF and the European Union broke off talks last month on Hungary’s bid for a bailout after Orban refused to withdraw new central bank regulation the institutions said may undermine monetary-policy independence. The forint fell to a record against the euro as investors speculated an IMF accord may be delayed.
Fellegi is authorized to indicate that Hungary is ready to implement the program agreed during negotiations as “it’s only natural” that the IMF will want to see such economic policy that “guarantees” the lender “will get its money back,” Orban said.
‘Agreed Conditionality’
The IMF will only continue bailout talks with Hungary when the government is willing to accept a Stand-by Arrangement “with agreed conditionality,” Christoph Rosenberg, the lender’s mission chief to Hungary said on Dec. 28.
The forint fell to a record low of 324.24 per euro on Jan. 5 and the yield on the benchmark 10-year government bond to 10.1 percent by the end of the week after rising to as high as 11.34 percent on Jan. 5, according to generic prices compiled by Bloomberg. The currency ended the week at 314.35 per euro.
“We want to raise the money necessary for running the country from the markets,” Orban said. “However, we want to send a clear message that Hungary disposes over the necessary resources at a time when available funding is becoming more scarce or even in the event of a significant protraction of the euro crisis.”
Hungary lost the investment grade on its foreign-currency debt at Standard & Poor’s, Fitch Ratings and Moody’s Investors Service in the past six weeks. The cost of insuring Hungarian bonds using credit-default swaps fell to 698 basis points by the end of the day on Friday, according to data provider CMA, which is owned by CME Group Inc.
‘No Legal Problems’
Orban rejected last month a request from European Commission President Manuel Barroso to withdraw the central bank bill and a law on financial stability.
The central bank law contains “no legal problems” and related criticism has been of political and not professional nature, Orban said. The government is ready to accept all recommendations on the central bank and financial stability bills if those are “worthy of consideration” as “maintaining or changing our earlier point of view is not an issue of prestige for us,” Orban said.
When asked if the government is sticking to raising the number of vice presidents and Monetary Council members despite European Central Bank objections, Orban said nobody has so far “proved” that the bill curbs monetary policy autonomy.
The government doesn’t plan to merge the central bank with the financial market supervisory authority during the term of current central bank Governor Andras Simor, Orban said.
The government will consult with the central bank on a daily basis and will work together to ensure economic stability, Orban said last week. The central bank, in a statement, said it will use “available tools” to ensure economic stability.
–Editor: Balazs Penz
To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net
To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net
Ethiopian Central Bank Loosens Monetary Policy to Boost Lending January 09, 2012, 12:30 AM EST
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By William Davison
Jan. 6 (Bloomberg) — Ethiopia’s central bank loosened its monetary policy in a move economists said is aimed at increasing the amount of cash that banks have available for lending.
The National Bank of Ethiopia cut the minimum ratio of deposits to be held in reserve to 10 percent from 15 percent with effect from Jan. 2, according to a directive issued by the Addis Ababa-based central bank and obtained by Bloomberg. The document was confirmed by Alemayehu Kebede, director of the bank’s communication directorate. The amount of “liquid assets” to be held as a proportion of deposits was also reduced to 20 percent from 25 percent, it said.
Lending to exporters and other businesses declined after the central bank issued a directive in April ordering banks to each month buy government securities equivalent to 27 percent of their total loans to help fund infrastructure projects, said Eyob Tesfaye, an independent economist who previously worked for the Ethiopian government. A slowdown in deposits also curbed banks’ ability to lend, he said in a phone interview today.
The central bank’s directive is “the right decision,” Eyob said. “You cannot strangle your export sector”.
Ethiopia is Africa’s second-biggest coffee exporter, according to data from the International Coffee Organization, and ships other commodities including gold, oil seeds and qhat, a narcotic leaf.
The International Monetary Fund and the World Bank said in August that restrictions on lending to private industry may constrain growth in Africa’s second-most populous nation. The government is targeting annual economic growth of 11.2 percent to 14.9 percent through mid-2015, while the IMF and World Bank say the country’s growth potential is as much as 8 percent.
The looser monetary policy will “definitely increase” money supply in Ethiopia and may result in higher inflation, Eyob said. Annual consumer inflation stood at 39.2 percent in November, according to data released by the Central Statistical Agency last month. The government has blamed the surge in consumer prices last year on high global commodity prices and increased money supply.
–Editors: Paul Richardson, Alastair Reed.
To contact the reporter on this story: William Davison in Addis Ababa via Nairobi at pmrichardson@bloomberg.net.
To contact the editor responsible for this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net.
The deputy governor of Indias central bank said the equation between growth and inflation in the country has become much more balanced in the last few months and indicated that interest rates were unlikely to rise further, though he stopped short of saying whether the next move would be a rate cut.
Growth risks obviously have come back into a much larger consideration based on what weve seen in the past few months, Subir Gokarn, the Deputy Governor of the Reserve Bank of India, told CNBCs Oriel Morrison on Thursday, adding that monetary policy had reached the peak of the cycle.
Gokarn also said the central bank would intervene in the forex market to reduce volatility in the exchange rate, rather than to defend a particular rate. According to Reuters, the central bank had been intervening indirectly via state-owned banks in recent weeks, with traders telling the news service, the RBI was protecting the rupee
BEIJING – China will maintain a prudent monetary policy this year with timely and appropriate adjustment, the Peoples Bank of China (PBOC), or the central bank, said here Sunday on the closing of a work conference of the central bank.
The PBOC will adjust credit supply and keep social financing at a reasonable growth under a macro-prudential policy frame with a set of policy tools, such as interest rates, exchange rates, open market operations and banks reserve requirement ratio, said the central bank in a statement on its website.
The PBOC said that it will strive to optimize credit structure and better serve the development of real economy, with more emphasis on the agricultural sector, the affordable housing projects and the small and micro-enterprises.
Chinas central bank on Sunday said in a separate statement that the countrys new yuan-denominated lending in 2011 reached 7.47 trillion yuan ($1.18 trillion), down from 7.95 trillion yuan in 2010.