Improving US jobs growth led to Federal Reserve taper

Federal Reserve members mostly agreed about a reduction in the central bank's stimulus efforts in December, meeting minutes released Wednesday reveal.

Wall Street facing tighter scrutiny as regulators move on Volcker rule

Wall Street is facing tighter scrutiny of its trading activities after US regulators moved on Tuesday to impose stricter rules on the types of trades banks can make following the financial crisis.

US economy shows signs of shrugging off higher interest rates

WASHINGTON: US home resales surged in August to a 6-1/2-year high and factories grew busier early this month in the Mid-Atlantic region, signs that rising borrowing costs might be weighing only modestly on the economy.

U.S. economic growth stronger than thought

The U.S. economy grew significantly faster than thought in the second quarter, which may help convince the Federal Reserve to start unwinding its stimulus program sooner rather than later.

Federal Reserve stops short of the clarity global markets crave

LONDON: Federal Reserve Chairman Ben Bernanke now knows why uncharted waters on mariners' charts used to be marked 'Here be Dragons'.

Rise in euro zone yields does not pose immediate risk: Officials

LONDON: A rise in euro zone borrowing costs, driven by the prospect of less US monetary stimulus, does not pose an immediate threat to struggling euro zone countries' ability to service their debt piles, officials said on Tuesday.

Bernanke signals continued support for low rates

WASHINGTON (AP) — The Federal Reserve's low interest-rate policies are giving key support to an economy still burdened by high unemployment, Chairman Ben Bernanke told Congress on Tuesday.

Federal Reserve should keep rates low until unemployment hits 6.5%, says Charles Evans

TORONTO/BERLIN: Deep divisions at the Federal Reserve were on display on Tuesday, just two weeks before the US central bank's next policy-setting meeting, with one top Fed official pushing for more easing, and another advocating limits.

Bernanke blames banks for holding back housing market

Ben Bernanke has said that the overly stringent lending requirements of banks are hurting the US housing recovery.

US Fed chairman Bernanke 'ready to act' on economy

The chairman of the US Federal Reserve Bank says he is monitoring risks to the economy and is prepared to take action if necessary.

Slowing US consumer spending points to economic slowdown

A modest increase in US consumer spending last month signalled the world's largest economy may struggle to accelerate this quarter.

Ben Bernanke hits back at Fed critics

US Federal Reserve chairman Ben Bernanke has criticised countries like China that run large trade surpluses.

"Currency undervaluation by surplus countries is inhibiting needed international adjustment," he said in a speech to the European Central Bank

He said that by buying dollars, these countries were hurting the US recovery and the global economy with it.

He also defended the Fed's policy of "quantitative easing", which has been criticised by China and Germany.

Defending QE

China, Germany and others have attacked the Federal Reserve in recent weeks for its decision to purchase another $600bn of US government debt in a bid to stimulate the US economy.

They say that the policy will unfairly devalue the dollar in currency markets, and that this could lead to inflation and asset bubbles elsewhere in the world.

The Chinese also argued the Fed had failed to take account of its responsibility for protecting the value of the dollar as a global reserve currency.

In his speech, Mr Bernanke defended the policy as the right response to falling inflation and high unemployment in the US.

He also said it was a natural extension of monetary policy, given that interest rates were near zero and could not be cut further.
On the attack

But Mr Bernanke went further than this, hitting back against his critics.

He said that their policy of accumulating dollar reserves in order to weaken their currencies and help maintain a trade surplus would hurt the recovery in industrial economies, and this in turn could harm the entire global economy.

"For large, systemically important countries with persistent current account surpluses, the pursuit of export-led growth cannot ultimately succeed if the implications of that strategy for global growth and stability are not taken into account," he said.

He spoke of a two-speed recovery, in which developing economies like China and India had rapidly bounced back, while industrialised countries like the US, Europe and Japan were growing much more slowly and suffered from high unemployment.

"Because a strong expansion in the emerging market economies will ultimately depend on a recovery in the more advanced economies, this pattern of two-speed growth might very well be resolved in favour of slow growth," he said.
Collateral damage

He also said the currency interventions by countries like China had other iniquitous effects.

He said it was unfair on other countries that allowed their currencies to appreciate, as they would be forced to bear the brunt of the economic adjustment.

Countries such as Brazil and South Africa have already complained that they have been put in exactly this position by the "currency war" between the US and China.

Mr Bernanke also warned that by refusing to let their currencies appreciate, countries like China would be forced to take other measures to stop risky inflows of speculative money, and to cool rising inflation.

On the same day of his speech, China announced a half-point rise in the percentage of cash its banks must hold in reserve - a measure designed to slow down a recent jump in inflation to 4.4%.

China has also taken measures in recent months to tighten up capital controls - designed to stop people speculating on the value of the Chinese currency.

Source: BBC
www.bbc.co.uk