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Recent FedSpeak Highlights

  • Ben BernankeThere probably will be some bank failures. There are, for example, some small, or, in many cases, de novo banks that are heavily invested in real estate in locales where prices have fallen and therefore they would be under some pressure.  So I expect there will be some failures.  Among the largest banks,  the capital ratios remain good. And I don't anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system.

    From the Q&A session

    [ February 28, 2008 ]

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    Testimony to Senate Banking, Housing and Urban Affairs Committee
  • Ben Bernanke A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability in an environment of downside risks to growth, stressed financial conditions, and inflation pressures. 

    [ February 27, 2008 ]

    A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability in an environment of downside risks to growth, stressed financial conditions, and inflation pressures. 

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    Source:

    http://www.federalreserve.gov/newsevents/testimony/bernanke20080227a.htm

    Venue:

    Testimony to House Financial Services Committee
  • Richard Fisher The economy is clearly anemic. We're going to have a period of substandard growth that'll stretch for a couple of quarters, if not a little bit longer.

    [ February 26, 2008 ]

    The economy is clearly anemic. We're going to have a period of substandard growth that'll stretch for a couple of quarters, if not a little bit longer. At the same time, we do have worse numbers than we had before on the inflationary front. It's always dangerous in this business to do what I think is an oxymoronic thing which is instant analysis. You have to really study the entrails of all the new numbers that have come through. I think it's too soon to form a judgment as to whether the economy is indeed weaker than I expected or inflation pressures are worse than I expected. But clearly the numbers that have come through indicate that we're in for a period of prolonged, slow, economic growth

  • Donald KohnAlthough a firming in the growth of economic activity after midyear now appears the most likely scenario, the outlook is subject to a number of important risks.  Further substantial declines in house prices could cut more deeply into household wealth and intensify the problems in mortgage markets and for those intermediaries holding mortgage loans.  Financial markets could remain quite fragile, delaying the restoration of more normal credit flows.  As observed in the minutes of its most recent meeting, the FOMC has expressed a broad concern about the possibility of adverse interactions among weaker economic activity, stress in financial markets, and credit constraints.

    [ February 26, 2008 ]
  • Frederic Mishkin What you're really concerned about is what's going with the long run or underlying trend in inflation, and that's what we need to focus on.

    [ February 25, 2008 ]

    What you're really concerned about is what's going with the long run or underlying trend in inflation, and that's what we need to focus on.

    From Q&A as reported by Reuters.

  • Randall Kroszner There are some challenges in the economy right now.

    [ February 25, 2008 ]

    Kroszner demurred on whether the U.S. economy is in recession.

    "There are some challenges in the economy right now," he said.

    On signs of inflation, he said, "We have seen some numbers in recent reports that are higher than they were before," but he added that the Fed must be careful to honor its dual mandate that includes ensuring maximum employment along with price stability.

    From Q&A as reported by Market News International

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    http://www.federalreserve.gov/newsevents/speech/kroszner20080204a.htm

    Venue:

    Global Association of Risk Professionals Convention & Exhibition
  • Richard Fisher We have to be mindful of that fact that we have to create the conditions for employment growth, at the same time be careful that we don't stir the embers of inflation.

    [ February 22, 2008 ]

    We have to be mindful of that fact that we have to create the conditions for employment growth, at the same time be careful that we don't stir the embers of inflation.

    As reported by Reuters.

  • William Poole Taking out insurance against certain risks is not free.

    [ February 20, 2008 ]

    In present circumstances, monetary policymakers will need to be careful to react to evidence on the state of the economy and likely outlook for employment. The issue is likely developments in the labor market and not merely possible developments. At the same time, policymakers will have to remain conscious of the lessons of history with regard to inflation. Here again, likely developments and not just possible developments must be the focus of attention. Risk mitigation to counter costly possible developments is an important strategy, but taking out insurance against certain risks is not free.

  • Gary Stern The potential for headwinds is integral to thinking about economic prospects over the next year or two. To the extent that these headwinds gain momentum, they suggest relatively modest growth for a time and the likelihood of increases in the unemployment rate.

    [ February 19, 2008 ]

    The potential for headwinds is integral to thinking about economic prospects over the next year or two. To the extent that these headwinds gain momentum, they suggest relatively modest growth for a time and the likelihood of increases in the unemployment rate. Their implications for inflation are not so clear, although I would note that the pace of inflation diminished in the early 1990s relative to its performance over the preceding several years.

  • Frederic Mishkin The disruption in financial markets poses a substantial downside risk to the outlook for economic growth, and adverse economic or financial news has the potential to cause further strains.

    [ February 15, 2008 ]

    I believe that the Federal Reserve has been acting and will continue to act decisively, in the sense that our lowering of the federal funds rate target has reflected the evolution of the balance of risks to the macroeconomy. The disruption in financial markets poses a substantial downside risk to the outlook for economic growth, and adverse economic or financial news has the potential to cause further strains. In that light, the Federal Reserve's policy strategy is aimed at providing adequate insurance to help mitigate the risk of more-severe macroeconomic outcomes.

  • Charles L. Evans Our outlook at the Chicago Fed is for real GDP to increase in the first half of the year, but at a very sluggish rate. However, we expect growth will pick up to near potential by late in the year and continue at or a bit above this pace in 2009.

    [ February 14, 2008 ]

    [O]ur outlook at the Chicago Fed is for real GDP to increase in the first half of the year, but at a very sluggish rate. However, we expect growth will pick up to near potential by late in the year and continue at or a bit above this pace in 2009.

  • Ben Bernanke Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further.

    [ February 14, 2008 ]

    Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further. The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.

    More From:

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    Source:

    http://www.federalreserve.gov/newsevents/testimony/bernanke20080214a.htm

    Venue:

    Testimony to Senate Banking, Housing and Urban Affairs Committee
  • Henry Paulson The worst is just beginning for sub-prime loan re-sets.

    [ February 12, 2008 ]

    "The worst is just beginning" for sub-prime loan re-sets.

    At Treasury-HUD press conference, as reported by Bloomberg News

     

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    Venue:

    Treasury Department News Conference
  • William Poole The best bet is that we will not have a recession.  My take on the current policy situation is that policy is at a good place for both the long-run and for cushioning the impact of financial disturbances.

    [ February 11, 2008 ]

    The best bet is that we will not have a recession.  My take on the current policy situation is that policy is at a good place for both the long-run and for cushioning the impact of financial disturbances.
     ...
    There is no question that the odds of a recession are higher than they used to be.

    From Q&A, as reported by Bloomberg News and Market News International

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    Source:

    http://www.stls.frb.org/news/speeches/2008/02_11_08.html

    Venue:

    National Association for Business Economics, St. Louis Branch
  • Henry Paulson I always thought that decoupling was a myth.

    [ February 9, 2008 ]

    I always thought that decoupling was a myth.

    As reported by Bloomberg News

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    G7 Meeting
  • Janet L. Yellen While growth seems likely to be sluggish this year, the Fed’s policy actions should help to promote a pickup in growth over time. I consider it most probable that the U.S. economy will experience slow growth, and not outright recession, in coming quarters.

    [ February 7, 2008 ]

    I believe that accommodation is appropriate because the financial shock and the housing cycle have significantly restrained economic growth. While growth seems likely to be sluggish this year, the Fed’s policy actions should help to promote a pickup in growth over time. I consider it most probable that the U.S. economy will experience slow growth, and not outright recession, in coming quarters. At the same time, core consumer inflation seems likely to decline gradually to somewhat below 2 percent over the next couple of years, a level that is consistent with price stability.

    However, economic prospects are unusually uncertain. And downside risks to economic growth remain. This implies that, going forward, the Committee must carefully monitor and assess the effects of ongoing financial and economic developments on the outlook and be prepared to act in a timely manner to address developments that alter the forecast or the risks to it.

  • Richard Fisher My dissenting vote last week was simply a difference of opinion about how far and how fast we might re-spike the monetary punchbowl.

    [ February 7, 2008 ]

    My dissenting vote last week was simply a difference of opinion about how far and how fast we might re-spike the monetary punchbowl. Given that I had yet to see a mitigation in inflation and inflationary expectations from their current high levels, and that I believed the steps we had already taken would be helpful in mitigating the downside risk to growth once they took full effect, I simply did not feel it was the proper time to support additional monetary accommodation.

    I respect the majority view of the committee. I sleep well at night knowing that the collective wisdom of the group is guided by one common goal: the continued prosperity of the American people.

  • Dennis Lockhart In the face of economic weakening, the FOMC acted to avoid a restrictive posture and get rates to a level I believe will support movement toward trend growth by the second half of 2008.

    [ February 7, 2008 ]

    In response to recent economic circumstances, the Federal Open Market Committee (FOMC) acted decisively. Over a period of nine days, from January 22 to January 30, the FOMC lowered the fed funds rate 125 basis points, from 4.25 to 3 percent. Since last August, the committee has dropped the fed funds rate 225 basis points.

    These actions were taken to avert a deep and protracted economic downturn. In the face of economic weakening, the FOMC acted to avoid a restrictive posture and get rates to a level I believe will support movement toward trend growth by the second half of 2008.

  • Charles Plosser I expect growth in the first half of the year to be quite weak, around 1 percent. As conditions in the housing and financial markets begin to stabilize, I expect growth to improve in the second half of the year and to move back to trend, which I estimate is around 2.7 percent, in 2009. Overall, I am now anticipating economic growth in 2008 of near 2 percent. Given the slowdown in economic growth this year, payroll employment will rise more slowly than last year and will remain below trend for much of the year before picking up in 2009.

    [ February 6, 2008 ]

    The ongoing housing correction and the volatility and uncertainty in the credit markets are significant near-term drags on the economy and I expect growth in the first half of the year to be quite weak, around 1 percent. As conditions in the housing and financial markets begin to stabilize, I expect growth to improve in the second half of the year and to move back to trend, which I estimate is around 2.7 percent, in 2009. Overall, I am now anticipating economic growth in 2008 of near 2 percent.  

    Given the slowdown in economic growth this year, payroll employment will rise more slowly than last year and will remain below trend for much of the year before picking up in 2009. Slower job growth will also lead to an unemployment rate near 5-1/4 percent in 2008, after fluctuating between 4‑1/2 and 5 percent in 2007.  

  • Jeffrey Lacker In my view, the prominence of downside risks means that further easing ultimately may be warranted. ... if incoming data is not weaker than expected over the next several months, it's not clear further rate cuts would be warranted.

    [ February 5, 2008 ]

    In my view, the prominence of downside risks means that further easing ultimately may be warranted. My expectation that growth is likely to be sluggish this year figured prominently in my thinking about policy last month, however, so if incoming data is not weaker than expected over the next several months, it's not clear further rate cuts would be warranted.