This is the second of four articles examining monetary and fiscal policy and the Federal Reserve’s response to the most significant issues of today’s economy. The first article examines the Fed’s challenge in meeting its mandate for full employment. This article looks at the Fed’s other mandate, for price ... READ MORE >
interest rates
FOMC meeting: Setting the stage for three rate hikes in 2022
The Federal Reserve on Wednesday set the stage for multiple increases in the federal funds policy rate next year by accelerating the tapering of asset purchases to $30 billion per month, up from $15 billion. The tapering should be wrapped up by March. This provides increased flexibility for the ... READ MORE >
RSM US Financial Conditions Index: Setting the stage for sustained growth
Manufacturers are expecting increased activity in the coming months, surveys by the regional Federal Reserve banks suggest. But perhaps more important in terms of productivity and global competitiveness, those manufacturers say they plan to increase capital expenditures and spending on ... READ MORE >
The LIBOR transition could affect manufacturing companies
Much has been written about what the elimination of the London Interbank Operating Rate (LIBOR)—the global interest rate benchmark—will mean for the financial sector and the resulting need to reset interest rates on trillions of dollars of financial products. The transition away from LIBOR will also ... READ MORE >
FOMC meeting: Prelude to tapering amid global financial turbulence
Monetary policy is always a difficult judgment call. Balancing growing global risk aversion, domestic political turmoil and general uncertainty around the underlying condition of the real economy make this week’s Federal Open Market Committee policy decision a bit more challenging than what many ... READ MORE >
Interest rate update: Inflation expectations remain subdued
In the modern era of monetary policy and moderate growth, global authorities have shown twice in the past decade their ability to counter horrific shocks to the financial sector and economic activity. Therefore, inflation expectations remain remarkably well anchored despite the recent five-month surge in ... READ MORE >
CHART OF THE DAY: Mortgage rates resume their downward march
Ten-year U.S. Treasury yields have drifted lower over the past couple of months, bringing mortgage rates to the lowest levels in nearly six months and well below historical levels. The average rate for a 30-year loan was 2.77% on Aug. 5, the lowest since Feb. 11. The historically low borrowing costs, ... READ MORE >
Federal Reserve policy and interest rates in 10 charts
The Federal Open Market Committee retained its accommodative policy stance on Wednesday, keeping short-term rates at the zero bound to provide liquidity for commercial activity. The FOMC said it would maintain its monthly purchases of securities to pressure long-term interest rates lower, facilitating ... READ MORE >
What’s behind the recent decline in 10-year Treasury yields
The yield on 10-year Treasury bonds has dropped nearly 25 basis points to below 1.5%, touching 1.42% overnight on June 11 from its recent peak of 1.74% on March 31. If the initial move up to 1.74% can be rationalized as a response to the risks around higher growth and inflation, then this recent move ... READ MORE >
Interest rate update: Recent increase shows progress on the path to normalization
The yield on 10-year Treasury bonds is approaching 1.7%, within 20 basis points of already low pre-pandemic rates. The recent increase in the 10-year is in response to signs of an economic recovery and perceived risks around higher inflation. But sub-2% interest rates on the 10-year Treasury are far ... READ MORE >