Before I get to Quarles and his qualifications, it’s important to understand the Fed and what it does. Its decisions are vital to every person on the planet who borrows or lends money (pretty much everybody) since it has enormous influence over global interest rates. Its board of governors also influences most other aspects of the global financial system, from regulating banks to how money is wired around the world. Continue reading
The Federal Reserve is expected to lift short-term interest rates at the close of its two-day meeting today and signal that more hikes are to come over the course of the year.
Numerous commentators have focused on who is hurt by rising rates, particularly those with lots of floating rate debt, such as a credit card balance, or anyone in need of a loan.
Not everyone, however, is negatively affected by rising rates. There are some individuals and businesses cheering the Fed on as it pushes up rates, including savers, people traveling abroad and foreign exporters and businesses with large cash balances.
There is a very high chance the Federal Reserve will raise interest rates next week. It would be the first time the Federal Open Monetary Committee (FOMC) – the Fed’s rate-setting team – has lifted its benchmark rate since 2006, beginning the so-called return to normal. Economists, traders and policymakers have been pontificating, prognosticating and placing bets about this decision for a long time, because the impact is expected to be far-reaching.
So how will higher rates affect you? Continue reading
The U.S. Federal Reserve has a complicated mandate. The legislation governing this agency states the Fed is supposed to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” It does this by controlling or influencing interest rates and controlling the U.S.’s money supply. The Fed has pushed down interest rates close to zero for many years to increase the number of employed people and reduce unemployment. By pushing interest rates down, it has explicitly ignored two of its three mandates. The key question for the Fed is when should it stop focusing on employment and refocus its attention on stable prices and moderate long-term interest rates? Continue reading
Every day the business press is filled with stories about what key central banks like the Federal Reserve, the Bank of England or the Bundesbank are doing to influence global economic affairs. For most of us these banks are relatively abstract institutions that control our lives but over which we have no control. However, there is one central bank that is unique. The Bank of Japan, which controls the money supply of the 3rd largest economy in the world, has shares traded on one of the Japanese stock markets. This means you can buy and sell parts of this central bank just like buying and selling shares of a major corporation like Google or Toyota. Not many people know about this and even fewer trade the stock. The day this was written just 5 trades happened. Continue reading