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Showing posts with the label Board of Governors of the Federal Reserve System

The FedNow℠ Service: The Fed's Blockchain?

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The Federal Reserve Board announced that the Federal Reserve Banks will develop a new round-the-clock real-time payment and settlement service, called the FedNow℠ Service, to support faster payments in the United States.

This is a direct response to the threat posed by digital currencies and blockchain. According to one Fed official, "Last summer, the U.S. Treasury recommended that 'the Federal Reserve move quickly to facilitate a faster retail payments system, such as through the development of a real-time settlement service, that would also allow for more efficient and ubiquitous access to innovative payment capabilities.'” Sounds like blockchain to us, thus, we expect this new system to be blockchain enabled. (For more on blockchain, see: What is Bitcoin? How does it relate to blockchain? Henry Zhang, Creative Investment Research Impact Investing Intern. University of Toronto.  Online at: https://creativeinvest.com/crypto/bitcoinfaq.html)

As we noted in our paper &quo…

Why the Fed is wrong about Libra

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The Federal Reserve Act (FRA) requires the Chairman of the Federal Reserve System to testify before the House Financial Services Committee and the Senate Banking Committee twice a year, in February and July, on how the Board handles monetary policy and its observations on economic developments.

In keeping with that requirement, the current Chairman of the Federal Reserve, Jerome Powell, testified before the House on July 10th. He indicated as follows:

Economic activity increased at a solid pace in the first part of 2019. The labor market has continued to strengthen: unemployment fell from 3.9% (Dec) to 3.6% (May), wage gains remained moderate. Inflation has been running below the Federal Open Market Committee’s (FOMC) longer- run objective of 2 percent. In June, the FOMC judged that current and prospective economic conditions called for maintaining the target range for the federal funds rate at 2 1⁄4 to 2 1⁄2 percent. Inflation: Consumer Price Index = 1.5 (May).Economic Growth: 1st qt…

Monetary Policy and the State of the Economy

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Probability of a Fed Rate Hike in March, 2018 is 92.3% by Hongcheng Chen, Creative Investment Research

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New Federal Reserve Chairman Jerome H. Powell (above) showed up at the Rayburn House Office Building on February 27 to deliver his first semiannual testimony before the Committee on Financial Services. Before he dug into the details of monetary policy, Powell described the outlook for the U.S. economy as bright androbust: “The U.S. economy grew at a solid pace over the second half of 2017 and into this year.” setting an optimistic tone for his interpretation of the current economy and prospects for the future. He emphasized that U.S. economy, from his perspective, is getting better, stating that, “my personal outlook for the economy has strengthened since December.” Apparently, the new Chairman of the Fed has full confidence in this country’s economy despite the Dow Jones’s plunge of more than 600 points in the same month.
EconomicOutlook
Here are some highlights from Powell’s testimony.
Labormarket:job growth since last year has been solid enough to lower the unemployment rate to 4.1%;…

Impact Investing