Ordinary reality doesn’t change depending on whether you believe in it or not, as Neil deGrasse Tyson, the astrophysicist and science educator, likes to observe. But ordinary reality isn’t the world central bankers live in. They live in a world of self-fulfilling expectations. We saw that this week when Jerome Powell, the chair of the […]
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In the typically tame market for government bonds, investors have been left reeling from some of the most chaotic trading conditions they have ever seen, entrenching concerns about the broader economy since the collapse of Silicon Valley Bank. It’s the kind of trading that makes the often more turbulent stock market seem calm: While the […]
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The transcript shows that he said “zero” was the proper target if “inflation was correctly measured.” But it is difficult to measure inflation accurately, as everyone in the room acknowledged. So Ms. Yellen said, “Improperly measured, I believe that heading toward 2 percent inflation would be a good idea, and that we should do so […]
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Banks are turning to the Federal Reserve’s loan programs to access funding as turmoil sweeps the financial system in the wake several high-profile bank failures. The collapse of Silicon Valley Bank on March 10 followed by Signature Bank on March 12 prompted depositors to pull their money from some banks and sent the stock prices […]
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Stocks rose on Thursday afternoon, after a second day of volatility in which the S&P 500 swung between gains and losses. The index rose about 0.3 percent in afternoon trading. It had earlier climbed more than 1.7 percent, but gave up most of that gain before climbing again. The big swings this week have come […]
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WASHINGTON — The chair of the Federal Reserve, Jerome H. Powell, has repeatedly undercut a central claim Republicans make as they seek sharp cuts in federal spending: Government spending is driving the nation’s still-hot inflation rate. Republican lawmakers say spending programs signed into law by President Biden are pumping too much money into the economy […]
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WASHINGTON — In 2008, an imminent collapse of the banking system consumed Congress before lawmakers delivered a bailout. Three years later, a debt limit crisis enveloped Washington and led to a series of spending cuts after a dangerous brush with default and a first-ever downgrade in the nation’s credit rating. Now unease about the banking […]
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The Bank of England is set to announce its latest interest rate decision on Thursday, with investors expecting a quarter-point raise, just a day after data showed that Britain’s inflation rate unexpectedly increased last month. Consumer prices rose 10.4 percent in February from a year earlier, up from 10.1 percent the month before, ending a […]
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Stocks on Wall Street skidded lower in late trading on Wednesday, as investors balked at the Federal Reserve’s decision to raise interest rates, by a quarter of a percentage point, amid a banking crisis. The S&P 500 initially jumped after the decision was announced, before falling sharply toward the end of trading, finishing 1.65 percent […]
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How the Fed’s projections for future interest rates have evolved A chart with an animated line that shows the evolution of the federal funds target rate from March 2018 to March 2023. As the line animates, boxes appear that show the range of Federal Open Market Committee members’ projections for future rates. As of March […]
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As Wall Street braces for the Federal Reserve to — probably — raise interest rates on Wednesday, some analysts have said that the recent turmoil in the banking industry may have already generated similar effects to a rate increase, namely by slowing the economy. The Fed began raising interest rates a year ago to combat […]
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The Federal Reserve faces a difficult decision at its meeting that ends this afternoon: Should Fed officials raise interest rates in response to worrisome recent inflation data — and accept the risk of causing further problems for banks? Or should officials pause their rate increases — and accept the risk that inflation will remain high? […]
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The fallout from the recent banking crisis spurred by the collapse of two banks — and concerns about the health of a third — is bubbling up in the market for commercial real estate lending, as borrowers fear that banks will pull back. That could slow down construction activity and increase the likelihood of a […]
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WASHINGTON — The Federal Reserve’s decision on Wednesday on whether to raise rates at a precarious moment carries risks not just for the central bank, but also for President Biden. Mr. Biden was already relying on the Fed to maintain a delicate balance with its interest rate decisions, simultaneously taming rapid price growth while avoiding plunging the […]
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Reeling from the collapse of banks that prompted intervention from authorities around the world and generated violent swings in financial markets, investors, analysts and economists are sure of nothing ahead of the Federal Reserve’s decision on interest rates on Wednesday. Futures on the S&P 500, which give investors the ability to bet on the stock […]
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Britain’s inflation rate unexpectedly rose last month, reversing its recent downward trend and potentially undermining expectations that the Bank of England was close to halting interest rate increases. Consumer prices in Britain rose 10.4 percent in February compared with a year earlier, the Office for National Statistics said on Wednesday. The rate had slowed for […]
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When Madeleine Eiswohld decided to move in with her boyfriend last year, she never expected to find it so difficult to sell her apartment. It’s a cozy studio, with lots of natural light, in Huddinge, an increasingly desirable suburb of Stockholm. But the timing was all wrong. She listed her place as Sweden’s housing market […]
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A major reason for this inattention, as I noted last week, was the 2018 bank-deregulation law passed by Congress, which raised the threshold for banks that received special Fed scrutiny from $50 billion to $250 billion. (Silicon Valley’s and Signature Bank’s assets were $209 billion and $110 billion, respectively.) At a Senate hearing last week, […]
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The Federal Reserve entered 2023 focused on a central goal: wrestling down the rapid inflation that has plagued American consumers since 2021. But over the past two weeks, that job has become a lot more complicated. Many economists expect central bankers to raise interest rates a quarter-point, to just above 4.75 percent, on Wednesday, continuing […]
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WASHINGTON — Silicon Valley Bank’s risky practices were on the Federal Reserve’s radar for more than a year — an awareness that proved insufficient to stop the bank’s demise. The Fed repeatedly warned the bank that it had problems, according to a person familiar with the matter. In 2021, a Fed review of the growing […]
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Financial Regulators Turned Out to Be Fighting the Last War In 2015, Greg Becker, the chief executive of Silicon Valley Bank, submitted testimony to the Senate Banking Committee arguing that the Dodd-Frank financial regulation rules should be loosened for banks like his. If they weren’t, Becker warned, Silicon Valley Bank “likely will need to divert […]
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The events of the past week have proven that smaller bank oversight, regulation or both should be improved. Clearly, risk-management functions, on-site supervision, and the qualifications and role of boards of directors should be evaluated. The $250,000 limit on deposit insurance should be raised, perhaps substantially to at least $2 million but perhaps as much […]
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Donald Kohn, a former vice chair of the Fed, and William English, a former top staffer, wrote in June that the Fed isn’t designed to be a profit-making institution. They conceded that if the Fed kept losing money, its borrowing needs could potentially become so big that they would interfere with the conduct of monetary […]
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The U.S. economic recovery has repeatedly defied predictions of an impending recession, withstanding supply-chain backlogs, labor shortages, global conflicts and the fastest increase in interest rates in decades. That resilience now faces a new test: a banking crisis that, at times over the past week, seemed poised to turn into a full-blown financial meltdown as […]
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It was a week of market turmoil that began with the collapse of a small bank in the United States, spiraled into a panic about the global financial system and ended with a bold effort to stanch the cascading crisis. And it was the clearest illustration yet of the dangerous side effects of campaigns by […]
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Quantitative tightening is supposed to be boring. That’s by design. It doesn’t demand attention like a bank failure, emergency government rescue, wildly fluctuating interest rates or uncomfortably high inflation. But it is the most important Federal Reserve program you rarely hear about. At its core, it involves reducing the more than $8 trillion — yes, […]
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WASHINGTON — If a number defined the 2010s, it was 2 percent. Inflation, annual economic growth, and interest rates at their highest all hovered around that level — so persistently that economists, the Federal Reserve and Wall Street began to bet that the era of low-everything would last. That bet has gone bad. And with […]
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Upheaval in financial markets continued on Thursday, as investors balanced pockets of turmoil emanating from the banking industry against some semblance of stability returning to the broader market. The S&P 500 opened with a drop, before quickly rallying to a gain of more than 1 percent by midday. The Stoxx 600 index, which tracks shares […]
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Last weekend, U.S. policymakers went all in on bailing out two medium-size banks: Silicon Valley Bank and Signature Bank. And yes, they were bailouts. I wish the Biden administration weren’t trying to claim otherwise. Yes, stockholders were cleaned out. But legally, deposits are insured only up to $250,000; by choosing to make all depositors whole, […]
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The European Central Bank raised interest rates by half of a percentage point on Thursday, going ahead with its previously stated plan even as worries about several banks gripped financial markets in recent days. The central bank said in a statement that its policymakers were “monitoring current market tensions closely” and the bank “stands ready […]
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Wall Street’s worries eased on Tuesday, as investors took comfort from signs that a potential banking crisis appeared contained and bet on a more supportive environment for the economy going forward. The S&P 500 rose 1.7 percent, lifted by a recovery in some bank stocks and bolstered by gains for heavyweights like Microsoft and Apple, […]
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