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Speech
Bullard Discusses Financial Stress, Rate Increases and Inflation on Bloomberg TV
During an appearance on Bloomberg TV, St. Louis Fed President Jim Bullard discussed financial stress, the federal funds rate and inflation.On banking sector problems, Bullard said the reaction was swift and appropriate. He said he projected an 80% probability that the financial stress within the sector will decline.“You’ve got the macroprudential tools for financial stress, and you’ve got monetary policy to fight inflation. We can do both as long as financial stress doesn’t morph into something much larger,” he said.To bring down inflation, Bullard said the median Federal Open ...
Discussion Paper
Measuring the Financial Stability Real Interest Rate, r**
Comparing our financial stability real interest rate, r** (“r-double-star”) with the prevailing real interest rate gives a measure of how vulnerable the economy is to financial instability. In this post, we first explain how r** can be measured, and then discuss its evolution over the last fifty years and how to interpret the recent banking turmoil within this framework.
Journal Article
The Global Pandemic and Run on Shadow Banks
In March, the global coronavirus pandemic led to a period of financial stress in which credit conditions tightened at an unprecedented pace. Elements of this stress period can be explained as a classic run on “shadow banks”—nonbank financial institutions that fund long-term assets with short-term debt. Although timely Federal Reserve interventions restored some calm to markets, shadow banks remain vulnerable to future runs because they lack the safeguards available to regulated depository institutions.
Briefing
Mortgage Spreads and the Yield Curve
Mortgage spreads — the 30-year mortgage fixed rate minus the 10-year Treasury rate — have a history of increasing sharply in times of economic stress. While often viewed as a measure of financial stress, I argue they are mostly explained by changes in expected mortgage duration arising from changes in the yield curve. Economic stress leads to a downward-sloping yield curve, which increases expected refinance activity, shortening mortgage durations. This shorter duration makes mortgages prices reflect short (rather than long) Treasury rates. But with a downward-sloping yield curve, this ...
Speech
Financial Conditions, the Economic Outlook and Monetary Policy
St. Louis Fed President Alberto Musalem gave a speech, “Financial Conditions, the Economic Outlook and Monetary Policy,” at a Money Marketeers of New York University Inc. event in New York.
Journal Article
How Low- and Moderate-Income Households Are Coping with Inflation
Most people across income groups report financial stress from recent high inflation. To cope, individuals with lower incomes have cut back on necessities.
Speech
Bullard Speaks about Financial Stress and the Economy
St. Louis Fed President Jim Bullard presented “Financial Stress and the Economy” at a meeting of the Arkansas Bankers Association in Little Rock.He said that financial stress has been on the rise in recent weeks, but the macroprudential policy response has been swift and appropriate. He added that regulators are prepared to take additional steps if needed.Data on the real U.S. economy have generally been stronger than expected, and inflation remains too high, Bullard said. He pointed out that FOMC policy has kept market-based measures of inflation expectations relatively low, which bodes ...
Report
Community Education Circles in the Lawrence Public Schools: evaluation design and baseline survey data
This paper describes a plan for evaluating the Community Education Circles (CECs) program that is being implemented in the Lawrence Public Schools as part of an effort to enhance family-school engagement and improve outcomes for both students and parents. The CECs program supports the larger Lawrence Working Families Initiative, which in 2013 was awarded a multiyear grant through the Boston Fed?s Working Cities Challenge. This paper accomplishes several objectives: (1) describe the goals and methods of the CECs program as well as the larger goals of the Lawrence Working Families Initiative; ...
Journal Article
Safe-Haven Performance in the Age of Bitcoin
In past periods of financial stress, investors seeking “safe havens” have shifted toward government bonds and gold. In recent years, some have questioned whether Bitcoin could also serve as a safe haven. We compare the behavior of government bonds, gold, and Bitcoin from January 1995 through February 2020 and find that the 10-year Treasury note behaved like a safe haven consistently, gold occasionally, and Bitcoin never. During March 2020, however, none of the assets can be classified with confidence as a safe haven.
Speech
Financial Stress and the Current Macroeconomic Outlook
St. Louis Fed President Jim Bullard presented “Financial Stress and the Current Macroeconomic Outlook” at a meeting of Greater St. Louis Inc.He noted that financial stress has been on the rise in recent days and that the macroprudential policy response has been swift and appropriate. He added that regulators stand ready to take additional action if necessary.Meanwhile, incoming data on the U.S. macroeconomy have been stronger than expected, and inflation remains too high, Bullard said. He also noted that FOMC policy has kept market-based measures of inflation expectations relatively low, ...