Fed to Pack Up Crisis Tool, Debate Next Hike: Decision-Day Guide
Will the Federal Reserve raise interest rates again this year? That’s the big question investors are hoping policy makers clarify when they conclude a two-day meeting Wednesday. Fed officials are widely expected to leave rates unchanged as they announce a start date for the gradual unwinding of the U.S. central bank’s $4.5 trillion balance sheet. That milestone, 10 years after the onset of the financial crisis, has been so well telegraphed by officials that it looks likely to be a non-event in financial markets. The release of the policy-setting Federal Open Market Committee’s statement and updated economic and interest-rate projections is scheduled for 2 p.m. in Washington, followed 30 minutes later by Fed Chair Janet Yellen’s press conference. Here’s what to watch for: Yellen can expect to be asked, again, about whether she’s discussed her future with President Donald Trump, after it emerged that she had breakfast with his daughter Ivanka in July. Vice Chairman Stanley Fischer, attending his final FOMC meeting this week, has further added to speculation about the Fed’s future leadership by unexpectedly announcing his decision to resign in mid-October. Trump said last week that he likes and respects Yellen but hasn’t made a decision yet about the next Fed chair. Yellen, whose term ends in February, has repeatedly deflected all questions on this topic and will probably do so again.
EU moves to extend grip on financial sector after Brexit
The European Commission on Wednesday proposed transferring some powers to oversee the financial sector from national capitals in a move to extend the EU’s grip on the industry as the bloc prepares for the departure of London, its main financial hub. The proposal is part of a broader long-term plan that could lead to common supervision of the European financial sector and widely expand European Union regulators’ clout over foreign firms that operate in the EU. “What we are proposing is a gradual approach,” the commission’s vice president Valdis Dombrovskis said. He said the move was ambitious but realistic. “Eventually we could arrive at a single European capital markets supervisor,” he told a news conference in Brussels. The commission’s proposals need the backing of EU states and lawmakers. EU states have been traditionally reluctant to give away supervisory powers, but the decade-long financial crisis has allowed major changes, with the European Central Bank taking oversight of the euro zone’s largest banks. The strengthening of EU supervision on capital markets was made more urgent by Britain’s vote to leave the EU, which will deprive the EU of its main financial center in London.
China central bank backs mortgage rate hikes in capital
hina’s central bank supports a move by some banks to increase lending rates on mortgage loans in the Beijing market, state broadcaster China Central Television (CCTV) on Tuesday quoted the central bank as saying. Mortgage lending rates that are 5 percent to 10 percent higher than the benchmark lending rate have become “a mainstream phenomenon” in Beijing, the business management department of the People’s Bank of China (PBOC) said. The banks’ move was “in line with the policy direction”, it added.