Fed on The Move
Fed changing unemployment rate.
Fed changing unemployment rate.
The Federal Reserve faces a difficult decision at next month’s policy meeting on whether to offer further stimulus to a U.S. economy that is still growing but only slowly, St. Louis Fed President James Bullard said on Friday. Policymakers could wait until December if they felt the need for greater clarity on the outlook, Bullard told CNBC television, though he acknowledged that financial markets were already assigning a very high probability of Fed action at the November meeting. “This upcoming FOMC meeting is going to be a tough call, because the economy has slowed but it hasn’t slowed so much that it’s an obvious case to do something,” Bullard said. “I do think the risk of a double-dip recession has probably receded some in the last six to eight weeks.” Bullard, a self-proclaimed hawk, said the recent downward trend in inflation was a concern, but dismissed the argument that more Fed easing, which would take the form of further Treasury purchases, would be ineffective. He cautioned against allowing the United States to go the way of Japan, a country that has struggled with a prolonged period of depressed prices and economic stagnation. He indicated that, despite some reluctance about the risks of unconventional policies, the situation might require bond purchases beyond the more than $1.7 trillion the Fed has already conducted in response to the financial crisis. “It doesn’t seem like it’s going to come back toward (the Fed’s inflation) target unless we take further action,” Bullard said. After bouncing …Continue Reading
You may ask yourself where does the Federal Reserve stand on the economy. The Fed reportedly said that they will “ease” monetary policy to further boost the economy and lower unemployment while refraining today from expanding its holdings of securities. “The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate,” the Federal Open Market Committee said today in a statement in Washington. The Fed reiterated that it would keep the benchmark lending rate in a range of zero to 0.25 percent “for an extended period.” Policy makers said the pace of recovery and job growth have “slowed in recent months.” The committee also said inflation is “currently at levels somewhat below” what officials judge to be consistent with price stability. The FOMC retained its stance from last month of keeping its portfolio stable at around $2 trillion to keep money from draining out of the financial system. “Inflation is likely to remain subdued for some time before rising to levels the committee considers consistent with its mandate,” the statement said. Kansas City Federal Reserve Bank President Thomas Hoenig dissented against the decision for a sixth straight meeting, tying a record for most consecutive dissents at regular FOMC meetings since 1955 because he “believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period …Continue Reading
WASHINGTON-The Federal Reserve’s new rules on loan officer compensation are expected to force mortgage companies to review the way they conduct business and compensate their employees. “It’s going to make a lot of people restructure their mortgage departments,” according to Elizabeth Deal, executive vice president of a mortgage subsidiary controlled by the Independent Community Bankers of America. Lenders will have to rewrite the job descriptions of their LOs and compensation packages, “which could really impact their way of life.” The Fed compensation rule allows lenders to pay a loan officer or mortgage broker a flat fee or a percentage of the loan amount. ICBA Mortgage provides community banks with access to the secondary market. Several community banks pay their loan officers a base salary with many LOs receiving a bonus at yearend based on their mortgage production volume. “Probably, this rule change doesn’t affect a majority of our members,” she said, “but it does affect some.” Scott Stern, CEO of Lenders One, a mortgage cooperative with 155 member firms, said there is much confusion about the Fed’s compensation rule among his affiliates. “They are concerned about possible limits on company compensation and loan officer compensation,” he said. The Lenders One CEO stressed that he supports one key objective of the Fed rule, which is to ban compensation practices that encourage LOs to steer borrowers into riskier and higher-priced loans, including nonprime mortgages that carry teaser rates and prepayment penalties. “However, the rule should empower LOs to earn a living based …Continue Reading
