U.S. interest-rate swap spreads plunged to the narrowest on record as traders speculate the Federal Reserve may reduce how much it pays on reserves at today’s policy meeting to keep money market rates low.
Federal Reserve officials are renewing a debate over cutting interest paid to banks on excess reserves, a move aimed at convincing investors that tapering its bond-buying isn’t the same as tightening its monetary policy.
Janet Yellen, nominated to be the next chairman of the Federal Reserve, signaled she will carry on the central bank’s unprecedented stimulus until she sees improvement in an economy that’s operating well below potential.
In 1980, the U.S. economy was in the middle of a severe downturn, and jobs weren’t easy to find. So Lou Crandall , after earning a bachelor’s degree with a focus on economics from Cornell University, scattered resumes far and wide. One went to an employment agency looking for bilingual workers. Crandall had spent five years of his boyhood in Italy, where his father taught in an American school, and was fluent in Italian, Bloomberg Markets magazine reports in its January issue.
Federal Reserve Chairman Ben S. Bernanke sent bond yields a percentage point higher just by talking about adding stimulus at a slower pace. The rout serves as a warning to monetary policy makers that their exit from record accommodation won’t be easy to control.
When Treasury Secretary Jacob J. Lew told the Senate Finance Committee last week that the Obama administration would never bargain over raising the nation’s debt limit, it was a declaration the lawmakers had heard before.