Rate Hike Opponents Overwhelmed The Fed's Phone System
Left-leaning groups affiliated with the Fed Up campaign,...
Left-leaning groups affiliated with the Fed Up campaign, including CREDO Action, the Working Families Party and Daily Kos, estimate that over 400 of their members called the Federal Reserve Board of Governors’ public comment hotline and the phone numbers of the Fed’s special economic advisers late last week and early this week to express opposition to an interest rate hike. The activists, along with many liberal economists, believe the Fed should wait for higher wage growth before raising rates.
Around 9 a.m. Monday, activists reported being unable to record additional messages on the public comment hotline because it apparently was full, according to Fed Up. This continued for another two to three hours.
The Federal Reserve Board of Governors’ communications office declined to confirm the account or otherwise comment on the calls.
The Fed Up campaign’s opposition to an interest rate hike is part of a broader goal of making the Fed more accountable to average workers and their concerns. Fed Up convened dozens of grassroots activists to make their case to Fed officials in person at the Kansas City Fed’s Jackson Hole symposium in late August.
The Fed’s inability to receive more phone calls confirms it is "unused to actual public engagement," Fed Up campaign director Ady Barkan wrote in an email to The Huffington Post.
The Fed’s Federal Open Market Committee is meeting on Wednesday and Thursday to decide whether to raise its benchmark interest rate, and plans to announce its decision Thursday afternoon. The Fed has indicated it may decide to raise the rate slightly above the near-zero level, where it has remained since December 2008.
Proponents of an interest rate hike note that the official unemployment rate is down to 5.1 percent and argue that although inflation is well under the Fed’s 2 percent target, it is better to raise rates gradually sooner to avoid having to take more dramatic action later.
Opponents of a rate hike, however, observe that the official unemployment rate does not account for people who have given up looking for work or are working part-time involuntarily. That is why they believe the declining unemployment has not been accompanied by more significant wage growth.
"Millions of working families know from their own experiences that the economy is still struggling," said Murshed Zaheed, deputy political director of CREDO Action, in an email statement. "Intentionally slowing down the economy now would reduce job creation and prevent wage growth. It’s the last thing the Fed should be doing."
Source: Huffington Post
The Left's Fed Up Makes A Naked Power Grab For Control Of The Fed
The left is undertaking an amazing back door plan to dramatically increase its influence over the Fed’s interest-rate-...
The left is undertaking an amazing back door plan to dramatically increase its influence over the Fed’s interest-rate-setting Open Market Committee.
The key activist group, a division of the Center for Popular Democracy, is working to kick the bankers off the boards of directors of the district Federal Reserve banks. Those boards choose the presidents who serve, in rotation, as voting members on the FOMC. Brilliant.
In scope, the left’s plan makes trivial by comparison Auric Goldfinger’s “Operation Grand Slam” to contaminate America’s gold holdings at the US Treasury Depository at Fort Knox. Goldfinger planned to turn them radioactive. Those holdings amounted, in 1964, to about $14 billion. They are now valued at close to $200 billion.
Either way, a tidy sum. Yet it’s just a nickel compared to the Fed’s more than $4 trillion holdings.
Most impressive. The left is undertaking its own Operation Super Grand Slam.
It is doing so proficiently and systematically. Unfortunately for the left, fortunately for America, it has run into a real life James Bond: House Monetary Policy Subcommittee Chairman Bill Huizenga (R-MI). The irresistible force has met its immovable object.
Fed Up, the left’s instrumentality, was repelled during the most recent skirmish. This occurred last week at a hearing of a subcommittee of the House Financial Services Committee, “Federal Reserve Districts: Governance, Monetary Policy, and Economic Performance.”
Fed Up is a project of the Center for Popular Democracy, which, according to Wikipedia (citing a paywalled article by John Judis from the National Journal) is the successor, at least in part, to the somewhat notorious ACORN. According to the Center’s website:
The Federal Reserve has tremendous influence over our economy. Although our communities continue to suffer through a weak recovery and economic inequality keeps growing, corporate and financial interests are demanding that the Fed put the brakes on growth so wages don’t rise. There is a real danger that in early 2015 (sic), the Fed will cut the legs out from the recovery before the economy reaches full acceleration, costing our communities millions of jobs and workers tens of billions in wages.
True, and fair, enough. Let it be said that I, along with much of the right, also am highly critical of the Fed. I, a dues paying member of the AFL-CIO, am of the wing of the right wing that is in full solidarity with Fed Up’s commitment to wage growth.
We share identification of the Fed as a main perp in the failure of workers to thrive. From the right check out, for example, Put Growth First. Its website is headlined “End the Fed’s War on Wage Growth: Restore Prosperity for the Striving Majority.”
I, while opposing tokenism, am in sympathy with Fed Up’s stand that the Federal Reserve is unacceptably deficient in social, gender, and ethnic diversity. I have great admiration for Fed Up’s tactical proficiency, clarity of message, and decency in presenting that message. I, too, am fed up with the Fed.
That said, I am on record as dubious about the Fed’s power to “set” interest rates outside the trivial, and mostly symbolic, impact of setting the discount rate. I also am not part of the “raise interest rates” cheerleader squad on the right. I’m for allowing the credit markets to organically set interest rates based on … wait for it … supply and demand.
I part company with the left on its proposed solution of taking over district Federal Reserve Bank governance. Hola, Venezuela! Upon encountering Fed Up’s representatives while we were waiting to enter the Congressional hearing I requested the opportunity to engage in further conversation. Waiting, eagerly, to hear back.
Fed Up is a class act. Making the voices of the have-nots heard is commendable. Bring it on.
By Ralph Benko
Source
Fed chair Jay Powell faces his first political test
“Some campaigners are critical of the Fed’s handling of the mis-selling scandal at Wells Fargo, which is headquartered...
“Some campaigners are critical of the Fed’s handling of the mis-selling scandal at Wells Fargo, which is headquartered in Mr Williams’s district, while activists with the Fed Up group want the New York Fed to restart its search. “We haven’t seen as big a backlash as this to a regional Fed appointment,” said Sarah Binder, a professor of political science at George Washington University. “The criticism has been coming only from the Democrats, but that doesn’t mean it doesn’t matter. The Fed depends on there being public support, and it can only make tough decisions if it is seen as having legitimacy. The more criticism it faces the harder it is to do its job."
Read the full article here.
N.J. ACLU, others sue federal agency in brewing eminent domain controversy
The Star-Ledger - December 5, 2013, by Eunice Lee - The American Civil Liberties Union of New Jersey and the Brooklyn-...
The Star-Ledger - December 5, 2013, by Eunice Lee - The American Civil Liberties Union of New Jersey and the Brooklyn-based Center for Popular Democracy filed suit today against the Federal Housing Finance Agency in a growing battle for towns seeking to use eminent domain to seize underwater mortgages.
Last month, Irvington's mayor announced plans to conduct a legal study of using eminent domain to help residents facing more than 1,700 homes foreclosures.
If town officials decide to proceed, Irvington would become the second town in the nation, after Richmond, Calif., to employ a tactic that's drawn fire from Wall Street, according to Executive Director Udi Ofer of the ACLU of New Jersey, which endorsed Irvington's announcement.
The 17-page suit, filed today in the U.S. District Court for the Northern District of California, demands that the FHFA disclose details about its relationship with banks and other financial institutions. The agency has threatened legal action against Richmond and other cities planning to use the eminent domain tactic and may deny credit to locals seeking mortgages, the suit says.
Corinne Russell, an FHFA spokeswoman, declined comment on the lawsuit saying the agency does not discuss pending legal matters.
The novel approach, dubbed as "friendly condemnations," allows municipalities to use the power of eminent domain to seize mortgages, rather than homes, where homeowners owe more than the current value of the house.
Using money from private investors, Ofer said towns would pay the mortgage holders' fair market value and then restructure mortgages into lower principal payments that are more favorable for homeowners. About 700 to 1,000 homes in Irvington could potentially benefit from eminent domain takeovers, according to Irvington Mayor Wayne Smith.
On Wednesday, Newark's city council voted unanimously for the city to conduct legal research and policy analysis as a step towards adopting the eminent domain strategy.
Filed under the Freedom of Information Act, which compels the government to provide copies of federal records, the lawsuit argues that the federal agency is trying to block municipalities from using eminent domain to prevent foreclosures. The FHFA regulates the mortgage giants Fannie Mae and Freddie Mac. The lending agencies control most mortgages in the U.S.
The suit says the FHFA never responded to an Oct. 1 FOIA request seeking information between the federal agency and members of the financial industry, including the Securities Industry and Financial Markets Association, American Securitization Forum, American Bankers Association and the Association of Institutional Investors.
The lack of response to the FOIA request prompted the lawsuit, which was filed by the Center for Popular Democracy and ACLU, as well as chapters in New Jersey and California. Those chapters filed on behalf of: New Jersey Communities United, New York Communities for Change, Alliance for Californians for Community Empowerment, the Housing and Economic Rights Advocates, Urban Revival Inc., The Colorado Foreclosure Resistance Coalition and the Home Defenders League.
The FOIA request also targets "correspondence, phone messages, emails, calendar entries, and notes or memoranda" between leaders of the Federal Housing and Finance Agency and representatives of several banks including Wells Fargo, Deustche Bank, Bank of America, Chase Citigroup and Ally Bank.
On July 31, the city of Richmond offered to purchase 624 underwater mortgages. In August, the suit says several banks filed suit against Richmond and the FHFA released a statement citing "serious concerns on the use of eminent domain to restructure existing financial contracts."
Also, the financial industry and powerful lobbying groups have "vigorously opposed" the use of eminent domain, according to the suit.
The suit says that publicly revealing "the priorities and opinions of high-ranking FHFA officials, and the nature and substance of their exchanges with the financial industry" is an urgent concern.
Other cities considering the use of eminent domain to address foreclosures include San Francisco, El Monte, Calif., Seattle and Yonkers, N.Y.
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New York Questions Big Retailers Over 'On-Call' Staffing
Reuters - April 13, 2015 - New York's attorney general has sent letters to 13 national retailers, including Gap Inc,...
Reuters - April 13, 2015 - New York's attorney general has sent letters to 13 national retailers, including Gap Inc, Target Corp and JC Penney Co Inc, about "on-call shifts" in which workers are told whether to report to work a day or less before a scheduled shift.
Attorney General Eric Schneiderman's letters, sent on Friday, say on-call systems leave "too little time to make arrangements for family needs, let alone to find an alternative source of income to compensate for the lost pay" on days the employees are not called in to work.
A number of companies with stores in New York are requiring employees to check in by telephone, text message or email before a planned shift to see if their services are needed, Schneiderman wrote in the letters.
The system allows retailers to adjust staffing based on store traffic forecasts made by scheduling software. The companies can then reduce over-staffing and under-staffing.
His requests come as workers' advocates claim success in efforts to increase pay and benefits at fast food companies and national retailers, including recent raises of minimum wages by McDonald's Corp and Wal Mart Stores Inc.
Schneiderman said the "on-call" practice might violate the law in New York, where employers are subject to a rule that says employees who report for a scheduled shift on any day have to be paid for at least four hours at the basic minimum hourly wage.
Target said workers are informed of their schedules 10 days before the start of a work week and it does not employ "on-call" shifts. JC Penney said it has a policy against on-call scheduling. The Gap said it is committed to "sustainable scheduling practices" and is conducting research on the matter.
Worker advocates say unpredictable scheduling is one of the key challenges facing low-wage workers.
"One of reasons it is coming to light now is that people are organizing around it," said Tsedeye Gebreselassie, senior attorney at the National Employment Law Project.
He noted that a 2011 union-backed study of New York retail workers showed a fifth surveyed were required to always or frequently be available for on-call shifts.
Bills addressing on-call scheduling are currently being considered in the state legislatures of Massachusetts, Connecticut, Minnesota, Oregon and California, according to the Center for Popular Democracy, a worker advocacy group.
The U.S. Labor Department said it is aware of the on-call scheduling concerns and is looking into the matter.
"This is an important issue for workers struggling with work-life balance, especially for women," spokeswoman Tania Mejia said.
Schneiderman asked the retailers to provide details on the processes they follow to schedule on-call shifts, such as whether they use computerized systems and penalize employees who do not follow on-call procedures.
He also asked the companies for any analysis they might have conducted on cost savings associated with on-call shifts and the impact on workers' wellbeing. The companies have until May 4 to send in their responses.
The Gap said it was engaged in a research project with the UC Hastings College of Worklife Law to examine scheduling and productivity, and expects to receive some data in the fall of 2015.
"In the meantime, each of our brands also has been working to evaluate and refine their practices to make improvements," a spokeswoman for the retailer said.
Letters were also sent to Abercrombie & Fitch Co, J. Crew, L Brands Inc, Burlington Coat Factory, TJX Cos Inc , Urban Outfitters Inc, Crocs Inc, Ann Inc, Sears Holdings Corp and Williams-Sonoma Inc.
Sears and Ann Inc both said they do not use on-call scheduling. Representatives of the other retailers did not immediately respond to requests for comment. (Reporting by Supriya Kurane and Siddharth Cavale in Bengaluru, Karen Freifeld and David Morgan in New York, Nathan Layne in Chicago, and Lisa Baertlein in Los Angeles. Editing by Anupama Dwivedi, Dan Grebler and Andre Grenon)
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EXCLUSIVE: City Lawmaker Demands that Charter Schools Show How They Use Tax Money
New York Daily News - February 24, 2015, by Ben Chapman and Lisa Colangelo - A lawmaker is asking the city’s charter...
New York Daily News - February 24, 2015, by Ben Chapman and Lisa Colangelo - A lawmaker is asking the city’s charter schools to hand over paperwork showing how they use millions of dollars in tax money. And they have five days to do it.
City Councilman Daniel Dromm, who chairs the Education Committee, said he is troubled by the “lack of transparency and accountability” of charter schools.
“They receive over a billion dollars in taxpayer funds and we don’t know what’s going on,” Dromm, a Queens Democrat, told the Daily News on Monday.
Dromm sent a letter to all 197 charter schools in the city asking them for copies of their committee board minutes and fraud prevention policies. He also asked if they would voluntarily submit to the city Conflict of Interest Board to examine relationships between school board members and developers.
Dromm’s action comes after The News reported in November that an analysis by the Center for Popular Democracy found more than $28 million in questionable spending and probable financial mismanagement in 95% of the charter schools examined by state auditors since 2002.
James Merriman, CEO of the New York Charter School Center, dismissed Dromm as an “attack dog” for the United Federation of Teachers, which is opposed to charter schools.
Source
Activists urge Harvard to stop investing in Boston hedge fund that holds Puerto Rico debt
Activists urge Harvard to stop investing in Boston hedge fund that holds Puerto Rico debt
“As one of Baupost’s most significant outside investors, Harvard can exercise some influence on the hedge fund’s...
“As one of Baupost’s most significant outside investors, Harvard can exercise some influence on the hedge fund’s operations," said Julio López Varona, a member of Hedge Clippers. “They have a big endowment; their investment sets a tone.”
Read the full article here.
300+ Arrested in Mass Civil Disobedience Protests at the Nation's Capitol
300+ Arrested in Mass Civil Disobedience Protests at the Nation's Capitol
By Greenpeace In the final day of a record-setting week of civil disobedience at the Capitol, more than 300 people were...
By Greenpeace
In the final day of a record-setting week of civil disobedience at the Capitol, more than 300 people were arrested Monday as they demanded democracy reforms.
Yesterday's arrests came on the third and final day of Democracy Awakening. Combined with arrests made during the recent Democracy Spring, the protests constituted what organizers believe is a record for civil disobedience over democracy issues during this century.
The message: On voting rights, money in politics and the recent vacancy on U.S. Supreme Court, Congress is failing to do its job and ignoring the will of the people. Democracy Awakening isn't the end of something, but the beginning of a new phase in the movement for democracy, organizers said.
Those who planned to risk arrest included NAACP president and CEO Cornell William Brooks; the Rev. William Barber II, pastor and Moral Monday architect; radio commentator Jim Hightower; Ben Cohen and Jerry Greenfield, co-founders of Ben and Jerry's; Greenpeace Executive Director Annie Leonard; and Sierra Club President Aaron Mair.
Here's what they had to say about why they risked arrest at our nation's Capitol:
"I'm willing to risk arrest, arm in arm with partners from the civil rights and the labor movements, in order to help fix our democracy," Leonard said. "We will never get the kind of political progress needed to challenge climate change and systemic racism if corporate cash continues to mean more to politicians than the voices of the people."
"Democracy is supposed to be for all of us, but right now we have an out-of-balance system favoring the interests of big money," Cohen said. "This can't go on. I'm prepared to risk arrest to send a message that democracy should truly be of, by, and for the people."
"At a certain point, you have to say enough is enough," Greenfield said. "I have decided to risk arrest because we can't continue to have a political system where ordinary people are shut out of the process. It's not what our founders envisioned, and it's not what democracy is supposed to be about."
"We cannot sit by and watch obstructionists push an agenda of inequity, injustice and inaction -- and I'm willing to risk being arrested in order to make my voice heard in in the fight to ensure that every voice can be heard in our democracy," Mair said. "All too often, the costs of these assaults on our democracy fall on low-income communities and communities of color that already face disproportionate effects from pollution and the climate crisis. A zip code should never dictate the destiny of any American citizen."
Thousands of activists from around the country streamed into the nation's capital April 16-18 for Democracy Awakening, which featured teach-ins, a rally, a march and lobbying as well as the civil disobedience. The aim: to fight back against business as usual in Washington, DC.
More than 300 organizations endorsed Democracy Awakening. Democracy Awakening is part of a broad movement aimed at advancing democracy reforms. The mobilization began April 2, with Democracy Spring, an event that featured a march from Philadelphia to Washington D.C., followed by six days of sit-ins at the Capitol.
Others who planned to risk arrest included top leaders of the AFL-CIO, All Souls Unitarian Church, the American Federation of Government Employees, the American Postal Workers Union, Campaign for America's Future, Democracy Initiative, Center for Popular Democracy, Communications Workers of America, Ella Baker Center for Human Rights, Every Voice, Food & Water Watch, Franciscan Action Network, Free Speech for People, Friends of the Earth, Greenpeace, the International Brotherhood of Teamsters, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, Jobs With Justice, the Metropolitan African Methodist Episcopal Church; the NAACP, Oil Change International, Public Citizen, Sierra Club, the United Church of Christ, the United Food and Commercial Workers International Union, We Are Casa, the Yes Men and 350.org.
Source
A Broken Promise: Agency-Based Voter Registration in New York City
Executive Summary Voter registration is the number one barrier to the vote. An estimated 51 million eligible citizens,...
Voter registration is the number one barrier to the vote. An estimated 51 million eligible citizens, more than 24 percent of the electorate, could not cast a ballot on Election Day in the 2012 presidential election solely because they had not been registered. Registration and voting rates are particularly low for families with annual incomes below $20,000, voters of color, naturalized citizens, and those with limited English proficiency. Civic engagement levels are even worse in New York State. Fewer New Yorkers registered to vote and cast a ballot in the November 2012 general election than the national average.
Download the report here.
One proven method of increasing voter participation, particularly among underrepresented citizens, is voter registration at public agencies (“agency-based registration”). Well-administered voter registration programs established at public assistance agencies pursuant to federal law have helped register 15 to 20 percent of agency applicants. In 2000, New York City sought to expand voter registration opportunities at municipal agencies by enacting Local Law 29 (“the Pro-Voter Law”), which required 18 city agencies and, under certain circumstances, their associated subcontractors, to offer voter registration forms to all persons submitting applications, renewals, or recertification for agency services, or notifying the agency of a change of address. The law included each of the City’s 59 community boards as well. The last and only evaluation of the Pro-Voter Law, undertaken by the New York City Council over a decade ago, found that agencies were failing to offer voter registration.
In 2014, the Center for Popular Democracy, Brennan Center for Justice at NYU School of Law, Citizens Union of the City of New York, and the New York Public Interest Research Group formed the Pro-Voter Law Coalition and launched a new initiative to assess the agencies’ compliance with the law and opportunities to enhance the law’s impact. The Pro-Voter Law Coalition submitted Freedom of Information Law (FOIL) requests to each of the 18 city agencies; met with the Voter Assistance Advisory Committee at the New York City Campaign Finance Board; and, along with the Asian American Legal Defense and Education Fund and Make the Road New York, launched field investigations at 14 city offices subject to the Pro-Voter Law to measure their compliance with the law.
The FOIL responses and field investigations revealed widespread agency failure to implement the Pro-Voter Law. Specifically, they found:
Inconsistent adherence. Documents provided by the 12 agencies that responded to FOIL requests indicated scattered and inconsistent attention to the Pro-Voter Law; Noncompliance in a majority of interactions. In 84 percent of client interactions, agency officials failed to comply with the Pro-Voter Law’s requirement to offer voter registration application forms; Failure to provide language access. Agency failures extended to bilingual voter registration mandates. Specifically, only 40 percent, or 2 out of 5 agency clients whose primary language was not English were given translated voter registration applications; and No training of agency staff. All 11 of the agency employees who responded to training inquiries admitted that no agency staff receive regular training on voter registration procedures.These findings are particularly significant given that over 30 percent, or 18 of 59 citizen clients interviewed at the agencies required to comply with the Pro-Voter Law’s mandates reported they were not registered to vote.
Agency failure to comply with the Pro-Voter Law marks a lost opportunity to increase New York City voter registration rates and, by extension, voter participation in the city. Expanding opportunities for New Yorkers to register to vote at municipal agencies will require a concerted commitment by the Mayor, City Council, and municipal agency heads. The Pro-Voter Law Coalition is joined by the Asian American Legal Defense and Education Fund, the League of Women Voters of the City of New York, Common Cause New York, and Make the Road New York in issuing the following 12 recommendations to help ensure that every eligible city resident is registered to vote when interacting with city agencies subject to the Pro-Voter Law.
Click here to download the report.
Fed Leaves Interest Rates Unchanged
WASHINGTON — One of the longest economic expansions in American history remains so fragile that the ...
WASHINGTON — One of the longest economic expansions in American history remains so fragile that the Federal Reserve said on Thursday it would postpone any retreat from its stimulus campaign.
Janet L. Yellen, the Fed’s chairwoman, described the decision as a close call and said the central bank still expected to raise interest rates later this year. The Fed has kept its benchmark interest rate close to zero since late 2008, when the nation’s economy was at the depths of crisis.
“The recovery from the Great Recession has advanced sufficiently far and domestic spending has been sufficiently robust that an argument can be made for a rise in interest rates at this time,” Ms. Yellen said at a news conference.
But, she said, “heightened uncertainties abroad,” including the Chinese economy’s weakness, had persuaded the bank to wait at least a few more weeks for fresh data that might “bolster its confidence” in continued growth.
The Fed’s decision, announced after a two-day meeting of its policy-making committee, had been widely expected by investors in recent weeks.
Fed officials spent most of the summer suggesting that they wanted to raise rates in September, only to lose confidence as signs of slowing global growth weighed on markets.
The 10-year Treasury note yield fell 0.11 percentage points to 2.189 percent. The Standard & Poor’s 500-stock index dropped 0.26 percent to 1,990.20.
There were signs, however, that the Fed might hesitate only briefly. It separately released economic projections showing 13 of the 17 officials on the Federal Open Market Committee still expected to raise the benchmark rate this year.
The Fed has said it is moving toward raising rates because it expects economic growth to continue, reducing unemployment and eventually raising inflation; on Thursday, Ms. Yellen said that outlook had not changed.
“There’s a tendency among some to think that they’re always going to get cold feet, and I thought Yellen really as much as possible discouraged that kind of thinking,” said John L. Bellows, a portfolio manager at Western Asset Management.
The policy-making committee still has scheduled meetings in October and December, and Ms. Yellen said a rate increase was possible at either meeting.
One official, Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond, in Virginia, voted to raise rates at the September meeting, the first dissent this year. The economic projections suggest that Ms. Yellen faces more disagreements at the Fed’s October meeting, given that six officials predicted the Fed would raise rates at least two times this year, while four said that they expected no increases.
The latest postponement was welcomed by liberal activists and economists who argue that the recovery remains incomplete. Representative John Conyers Jr., Democrat of Michigan, introduced legislation on Thursday directing the Fed to push the unemployment rate below 4 percent. While the bill has no chance of winning approval in the Republican-controlled Congress, Mr. Conyers addressed a rally organized by the Center for Popular Democracy outside an office building where Ms. Yellen spoke, joining in a chant of “Don’t raise interest rates.”
Critics expressed concern that the Fed has adopted increasingly ambitious goals for its stimulus campaign. “There is always a reason to chicken out,” said Dean Croushore, a professor of economics at the University of Richmond. “The Fed will lose credibility over time, as it fails to follow its own prior announcements about when it will increase rates.”
Ms. Yellen, asked about the efforts to put public pressure on the Fed, which have mounted in recent months, dryly observed, “We have been receiving advice from a large number of economists and interested groups.”
She denied that outside pressure had influenced the Fed’s decision. She also said it had not been influenced by concerns about a potential government shutdown, which could disrupt growth, though she said that it “would be more than unfortunate.”
The Fed’s decision is probably a “mixed blessing” for the global economy,” Eswar S. Prasad, an economics professor at Cornell, said in an email. Instead of new pressures, investors must deal with continued uncertainty.
A Fed increase, for example, might have prompted investors to pull money out of countries like Turkey or Brazil, damaging their economies, and reduced demand for imports from Europe and other developed countries. But the decision to stand pat also could weigh on Europe in the short term if it causes the euro to rise against the dollar, making things harder for exporters.
The American economy is outpacing the rest of the world, and Ms. Yellen said on Thursday that the Fed did not yet see evidence that growth was slowing.
Fed officials say they believe that labor market conditions have nearly returned to normal. In the new round of economic projections, officials estimated unemployment would stabilize next year at 4.8 percent, just below the August level of 5.1 percent.
Officials also remain confident that inflation will rebound, although perhaps a little slowly because of the recent downturn in the prices of oil and other commodities. Since the financial crisis, inflation has remained consistently below the central bank’s 2 percent annual target, lately rising just 0.3 percent over the previous year.
Fed officials argue that a tighter labor market will lead to higher inflation as employers are finally prodded to pay higher wages. But, Ms. Yellen said on Thursday, that will happen more slowly than the unemployment rate might suggest, because people not counted among the unemployed — like those who have stopped looking for work or have taken part-time jobs — may start looking again as conditions improve.
James A. Wilcox, an economist at the University of California, Berkeley, said that it was difficult to find evidence for a strong connection between inflation and employment, particularly over the last decade. Inflation fell less than expected during the recession, and it has increased less than expected in the aftermath.
“The events of the last 10 years have caused a lot of rethinking and stomach acid within the Federal Reserve and the research community,” Dr. Wilcox said.
Recent history has reinforced the more basic point that it takes a lot to change the underlying pace of inflation. That stability has allowed the Fed to press its stimulus campaign, but Dr. Wilcox said it also provided a good reason for the Fed to be wary of allowing inflation to climb, because reversing the trend could be very painful.
“If the heat builds slowly, and it can only be turned down slowly, then you have to move ahead of time,” he said. “That’s why there’s sympathy for the idea of starting to raise rates relatively soon.”
Given the weakness of economic growth, however, Ms. Yellen reiterated on Thursday that the Fed planned to raise rates more slowly than its past practice. Fed officials expect the benchmark rate to reach 2.6 percent by the end of 2017.
In June, they predicted the rate would reach 2.9 percent. Officials also expect the rate to reach a new plateau of about 3.5 percent, less than the June prediction of 3.8 percent and significantly below the level once regarded as normal. Such a low plateau would limit the Fed’s ability to respond to economic downturns.
The Fed has already held its benchmark rate near zero much longer than it once expected. It announced in 2012 that it would keep rates near zero at least until the unemployment rate fell below 6.5 percent. That threshold was crossed in April 2014.
Last winter, when the Fed ended its bond-buying campaign, officials pointed to June as the most likely moment for “liftoff” from the so-called zero bound.
Some officials have made clear they are not inclined to wait much longer.
Stanley Fischer, vice chairman of the Federal Reserve, warned in late August that officials would not be able to postpone a decision until all doubts were resolved. “When the case is overwhelming,” he said, “if you wait that long, then you’ve waited too long.”
Ms. Yellen echoed that warning on Thursday. “We don’t want to wait until we’ve fully met both of our objectives to tighten monetary policy,” she said.
The Fed’s hesitation on Thursday echoed events of two years ago, when investors expected the central bank to announce at its September 2013 meeting that it was tapering its bond purchases. The Fed demurred, citing uncertainty about economic conditions.
Instead of September, it acted in December.
Source: New York Times
2 months ago
2 months ago