U.S. banks need to raise further $120 billion under new Fed rules

Federal Reserve policymakers left interest rates unchanged Wednesday, even as they refined and tweaked their domestic economic assessment and visibly eased concerns about the external economic and financial environment.

The committee would probably raise rates next month and continue doing so in the first half of next year in response to rising local inflation and interest rate normalization in the U.S., Nedbank economist Johannes Khosa said. He said there’s agreement within the Fed’s policymaking committee that future increases will occur at a very gradual pace that will leave rates low well into the future. While speaking at a background press briefing on Friday, Federal Reserve officials said that it is likely that the banks will meet the $120 billion loss by issuing debt, which is normally more cost-effective as compared to issuing equity.

Mexico’s annual inflation rate has fallen to the lowest in nearly half a century, dropping to 2.52 percent in September, amid weak growth, falling costs for phone services and lower gasoline-price increases. “When it comes to the labor market, the U.S. is in a position to hike rates”.

“The FOMC, if true they are tied to trends, can only be disappointed by the trend in consumption and wage growth coming out of the third quarter”, Blitz said in a note. Lacker said that he thought then that global economic pressures, which had rocked the markets, wouldn’t harm the USA economy and that his view had proved correct. Yet a price gauge the Fed tracks has stayed below 2 percent for three years and has recently slowed further, reflecting cheaper energy and a stronger dollar, which depresses import prices.

Lacker’s dissent and recent comments from two Fed board members questioning the link between tighter job markets and inflation caused a few Fed watchers to wonder whether Chair Janet Yellen was struggling to forge a consensus on when to begin raising rates.

The U.S. Treasury ponied up $700 billion to save the nation’s banks in September 2008 because the largest of them were deemed too big to fail.

According to the Fed, the new rule would allow for an orderly resolution process should one of the eight bank’s fail.

Six years after the recession ended, the world’s major central banks still seem to be in crisis mode – keeping interest rates near all-time lows to try to fuel economic growth.

The short-term rate has been at historically low levels for seven years now, and the Federal Reserve wants to be sure on the strength of the economy before pressing that button to raise the rates, as this could be a potential disaster for the American economy if things are still too unstable. Even if the Fed makes no policy changes Wednesday, there’s still likely to be spirited debate at the meeting as Yellen seeks consensus on the timing of a rate hike – a debate not without risks.

He said the language the Fed used in the statement it issued after its latest policy meeting was meant to put financial markets on notice that “December is very much a live meeting”.united-states-american-flag-HD-wallpaper

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