Archive for September, 2011
Aug. 31 (Bloomberg) — Federal Reserve Bank of Atlanta President Dennis Lockhart said the Fed should be ready to consider more monetary easing even while it cant be expected to eliminate some of the forces impeding economic growth.
Given the weak data weve seen recently and considering the rising concern about chronic slow growth or worse, I dont think any policy option can be ruled out at the moment, Lockhart said today in the text of a speech in Lafayette, Louisiana. However, it is important that monetary policy not be seen as a panacea.
Chairman Ben S. Bernanke said last week the central bank has additional monetary stimulus tools, while not providing details or committing to deploying them. Policy makers will extend a meeting next month to two days to allow a fuller discussion of the economy and the Feds possible response, he said in a speech at a conference at Jackson Hole, Wyoming.
The Federal Open Market Committee at its Sept. 20-21 meeting will assess a US economy that grew at a 1 percent annual rate from April through June, down from a 1.3 percent prior estimate, revised Commerce Department figures showed last week in Washington. Growth from January until June was weaker than any other six-month period since the recovery began in mid- 2009.
We may find, as economic circumstances evolve, that policy adjustments are required, Lockhart said to the Greater Lafayette Chamber of Commerce. In more adverse scenarios, further policy accommodation might be called for. But as of today, I am comfortable with the current stance of policy, especially considering the tensions policy must navigate between the short term and longer structural adjustments.
Revised Down
Lockhart said the Atlanta Fed has revised down its growth forecasts for this year and next. He said reduction of debt by consumers and businesses, financial system repair and fiscal policy changes are hurting the pace of the recovery.
Temporary factors, such as spiking commodity prices and supply chain disruptions related to Japans natural disaster, held back economic activity earlier this year, he said. But the slowdown cannot be explained by those factors alone and the downside risks to growth have risen notably.
Fed officials are split on whether to do more. Chicago Fed President Charles Evans said yesterday in a CNBC interview I would favor more accommodation. He also called for specifying markers for unemployment and inflation that would be needed to raise interest rates from near zero.
New Easing
Any new easing could face more opposition from some Fed presidents. Dallas Fed President Richard Fisher, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis voted against the August statement that pledged to keep interest rates near zero at least until mid-2013. The last time three voters dissented was on Nov. 17, 1992, under Bernankes predecessor, Alan Greenspan.
Disappointing job growth is limiting consumer spending, which accounts for 70 percent of output growth, the Atlanta Fed official said.
Higher cost of living and the weak labor market are likely to have discouraged consumers from increasing expenditures, he said. The consumer spending numbers for July were a bit higher than expectations, but still not at a level that would make for a robust recovery.
Payrolls climbed by 70,000 workers in August after a 117,000 increase in July, and the unemployment rate held at 9.1 percent, according to the median forecast of economists surveyed by Bloomberg News before Labor Department data Sept. 2.
Lockhart, 64, a former Georgetown University professor, has led the Atlanta Fed since 2007. Fed presidents rotate voting on monetary policy with Lockhart next voting in 2012. The Atlanta Fed district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee.
–Editors: James Tyson, Kevin Costelloe
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PARIS, Sept 1 (Reuters) – Frances Socialists are distancing themselves from Dominique Strauss-Kahn as the ex-IMF chief, once their best-placed presidential contender but now dogged by sex assault accusations, prepares to return from the United States.
With elections eight months away, the main opposition party is torn between old loyalties and the desire to shield itself from Strauss-Kahns tarnished reputation, after a poll showed two thirds of French voters do not want him in government.
US prosecutors have dropped charges that Strauss-Kahn tried to rape a New York hotel maid. But the 62-year-old still faces a civil case and an accusation of attempted rape by a woman 30 years his junior back in France.
He has promised to offer the French an explanation when he returns, possibly as early as this weekend.
In the three months since police pulled Strauss-Khan off a plane in New York, several of his most loyal allies have deserted him to back other left-wingers hoping to unseat conservative President Nicolas Sarkozy.
The maneuvering has shifted up a gear in the days since the US charges were dropped, leaving the former finance minister free to leave the country.
French media say he is due back on Sunday and Francois Pupponi, mayor of the town that long served as Strauss-Kahns political base, said he would be home by early next week.
Martine Aubry, a leading Socialist contender for the April presidential election, sought to distance herself from Strauss-Kahn in TV appearances this week, saying she shared the feelings of other women about his behavior toward the female sex.
While careful to underscore that she defends the presumption of innocence, her allusion was interpreted by French media as a signal that she would not let herself be hurt by association.
Ive always said this: first theres the presumption of innocence and secondly I think the same thing as many women regarding Strauss-Kahns attitude to women, Aubry told Canal+.
ALLIES FLOCK TO HOLLANDE, AUBRY
Of Strauss-Kahns closest allies, Pierre Moscovici, a former Socialist minister, has dropped him to become campaign coordinator for the lefts new favorite, Francois Hollande, and veteran leftist Jean-Christope Cambadelis is backing Aubry.
Jean-Marie Le Guen, a Socialist lawmaker who was vocal in his support of Strauss-Kahn just after his arrest in May, and another old ally, Lyon Mayor Gerard Collomb, have also joined Hollandes camp.
The fact is: as soon as (Strauss-Kahn) appears, he will be seen as the man who had sex with a New York hotel maid, said a Socialist party official close to Aubry.
Others with less at stake in the upcoming election campaign have been more blunt, notably Michel Rocard, a former prime minister who is no longer a kingmaker in Socialist politics.
Rocard ruffled feathers on Monday when he said of Strauss-Kahn on Canal+ TV: The man obviously has a mental illness, trouble controlling his impulses. Hes out of the game. Its a shame. He had real talent, thats true.
An opinion poll published last weekend suggested that about two-thirds of French voters do not wish to see Strauss-Kahn take a government role if the Socialists take power in next years presidential and parliamentary elections.
The Ifop poll, conducted on August 25-26, following the dropping of criminal charges in New York, nonetheless showed that about half of pro-Socialist respondents would be happy to see him take up a ministerial post.
Right now, the more pressing worry is the Socialists mid-October primary contest than Socialist hopes of unseating Sarkozy and his government next year.
An OpinionWay-Fiducial poll for Le Figaro and LCI published on Thursday showed that 44 percent of voters from the Left would vote for Hollande in the primary, with 30 percent choosing Aubry.
Arnaud Montebourg, another contender in the Socialist primary, said Strauss-Kahn should apologize to party colleagues and voters in the same way he did with International Monetary Fund staff in Washington.
He should make the same gesture after the toll we have all had to bear in this affair, Montebourg told ilt;tele TV.
(Additional reporting by Sophie Louet, Elizabeth Pineau and Alexandria Sage, editing by Rosalind Russell)
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The International Monetary Fund (IMF) has welcome the statements made by the leaders of the G7 countries and European Central Bank on taking steps to ensure market stability.
I welcome the statements from the European Central Bank, from the leaders of Germany and France as well as from the G7, and their renewed commitment to take all necessary action in a coordinated way to ensure stability and liquidity in the financial markets, IMF Managing Director, Christine Lagarde said.
This cooperation will contribute to maintaining confidence and spurring global economic growth, she said in a statement.
The swift implementation of the commitments by the Euro Area Governments on July 21, 2011, and the recent agreement to reduce the United States’ fiscal deficit in the medium term, without undermining growth, are further critical elements for financial stability, Ms. Lagarde said.
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European Central Bank council member
Jens Weidmann said the bank must scale back the additional risks
it has shouldered to help counter the region’s debt crisis.
Measures taken by the ECB have “strained the existing
framework of the currency union and blurred the boundaries
between the responsibilities of monetary policy on one side and
fiscal policy on the other,” Weidmann, who heads Germany’s
Bundesbank, said at an event in Hanover today. Over time this
can damage confidence in the central bank, he said. “It is
therefore valid to scale back the extra risks monetary policy
has taken on.”
The ECB is lending euro-area banks as much money as they
need at its benchmark rate and has also re-started its bond
purchase program — a step Weidmann opposed — in an attempt to
stem the spreading debt crisis. While European leaders on July
21 re-tooled their 440-billion-euro ($629 billion) rescue fund,
allowing it to buy government debt on the secondary market,
national parliaments still need to ratify the changes.
“Decisions on taking further risks should be made by
governments and parliaments, as only they are democratically
legitimized,” Weidmann said.
He said one option for a long-term solution to Europe’s
debt crisis could be “a real fiscal union.”
“Should one be unwilling or unable to take this path, then
the existing no-bailout clause in the treaties, and the
accompanying disciplining of fiscal policy, should be
strengthened instead of being completely gutted,” he said.
Weidmann said his comments don’t relate to current economic
developments or ECB policy, citing the one-week blackout prior
to a rate decision. ECB officials will convene on Sept. 8 in
Frankfurt.
To contact the reporter on this story:
Jeff Black in Frankfurt at
Jblack25@bloomberg.net
To contact the editor responsible for this story:
Craig Stirling at
cstirling1@bloomberg.net
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