reserve

Federal Reserve Chairman Jerome Powell may be trying to squash the stock market bubble

So much for Federal Reserve Chairman Jerome Powell being viewed as a bestie to investors.

“Powell hit the markets,” is an email subject line this writer got intra-day from veteran markets strategist Dennis DeBusschere of EvercoreISI. The email came smack in the middle of Powell testifying in front of the Senate Banking Committee —and the Dow Jones Industrial Average being off more than 300 points from session highs early Tuesday.

Powell initially did his part Tuesday to support a market some 40% higher from the March 23 lows (due to the Fed’s various stimulus measures), acknowledging once again that low interest rates and bond buying would be the norm for the forceable future. It would appear for the second week in a row though that Powell’s tough guy public tone — or poor bedside manner as Trump adviser Peter Navarro thinks — is leaving a bad taste in the minds

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Federal Reserve grapples with links between monetary policy and income inequality

Federal Reserve Chairman Jerome Powell on Wednesday acknowledged economic inequality in the United States but said monetary policy tools can only do so much to narrow the income gap.

Research from within the Fed itself, however, suggests that the central bank may be more effective when policymakers pay mind to income inequality while designing policy tools.

“Inequality is something that’s been with us increasingly for more than four decades and it’s not really related to monetary policy,” Powell said in a press conference after the Federal Open Market Committee announced it was holding rates at near-zero. 

Powell attributed the divide between the top wage earners and the lowest wage earners to globalization and technological trends that have created a greater skills gap. Powell said higher education would be required to get higher paying jobs, leaving the bottom wage earners without a way to increase compensation if education and new skills

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The Federal Reserve contributes to inequality: Former FDIC Chair

Sheila Bair, the former head of the FDIC during the financial crisis, said the Federal Reserve contributes to inequality in the U.S. and that monetary policy, which largely helps the wealthy, fails to adequately trickle down to other demographics. 

“I think it would be good for the Fed to acknowledge that and try to find better ways to use their tools in a way that doesn’t exacerbate the problem,” Bair said on Yahoo Finance’s On The Move. 

Bair was quick to point out the benefits of what the Fed has done in response to the sharp disruption in the economy, but said its inflation of asset prices “doesn’t really trickle down to labor markets.”

After the 2008 financial crisis, Bair said, the U.S. saw a similar narrative in the recovery with stagnant wage growth as the stock market soared. It took 10 years for lower- and middle-income families to see

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Federal Reserve not out of ammunition ‘by a long shot’

Federal Reserve Chairman Jerome Powell said the central bank can still do more to soften the economic blow of the coronavirus pandemic, telling CBS’s 60 Minutes that a recovery is possible in the second half of the year.

“There’s a lot more we can do,” Powell said. “We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot.”

Powell said the Fed could deploy new lending programs beyond the arsenal of facilities that it has opened up since the COVID-19 crisis began. Powell said the Fed could also adjust the forward guidance it provides to markets and the pace of its asset purchases.

The interview, televised on Sunday but taped on May 13, also offered cautious optimism over the speed of an economic recovery.

Powell said data covering the second quarter (April through June) will be “very, very bad”

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Federal Reserve to announce policy update this afternoon

The Federal Reserve has already cut interest rates to near-zero amid the COVID-19 crisis, but the central bank could soon message that it is far from out of ammunition.

The Fed is back on schedule with an April policy-setting meeting that wraps up Wednesday afternoon. Fed Chair Jerome Powell throttled the central bank’s scheduled March meeting after making an emergency announcement on March 15 slashing interest rates to the lower bound and restarting its crisis-era asset purchases through quantitative easing.

In its Federal Open Market Committee announcement on Wednesday, the Fed is unlikely to announce any major policy changes.

Instead, Powell’s remarks will provide a “status check” on the central bank’s arsenal of emergency measures taken since the coronavirus began taking grip in the U.S.

In addition to absorbing over $2 trillion in assets over the last few weeks, the Fed has also opened up nine liquidity facilities to backstop

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