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A Look at Reserves at the Fed

The Federal Reserve has flooded the financial system with trillions of dollars as part of its effort to boost the economy. All that money out there presents the central bank with a challenge as it contemplates when and how to raise interest rates. And it has had unintended consequences, including a flood of deposits at the Fed by foreign banks, which earn interest on the money.
It’s a bit complicated, but here are some basic answers to common questions.
What Are Reserves?

Source: http://blogs.wsj.com/economics/2014/09/29/a-look-at-reserves-at-the-fed/?mod=WSJBlog

ECB Faces Inflation Expectations Test

The European Central Bank has suffered an early setback in its battle to persuade households and businesses that inflation will pick up over coming months and years.

Source: http://blogs.wsj.com/economics/2014/09/29/ecb-faces-inflation-expectations-test/?mod=WSJBlog

Fed’s Fisher: Fed Should Consider Raising Rates in Spring

NEW YORK–Federal Reserve Bank of Dallas President Richard Fisher said Monday he might want to start raising interest rates next spring, rather than wait until later in the year as many of his colleagues prefer.
In an interview with The Wall Street Journal Monday, Mr. Fisher said the timing of the first increase in short-term rates from near zero “really depends on how the economy evolves.” But he added, “the spring may be the right time raise rates rather than the summer.”

Source: http://blogs.wsj.com/economics/2014/09/29/feds-fisher-fed-should-consider-raising-rates-in-spring/?mod=WSJBlog

Key Inflation Reading Slips Further Below Fed’s 2% Target

Consumer prices held flat in August from a month earlier, resulting in a closely watched annual inflation gauge slipping further below the Federal Reserve’s target.

Source: http://blogs.wsj.com/economics/2014/09/29/key-inflation-reading-slips-further-below-feds-2-target/?mod=WSJBlog

Business Economists See Lower Interest Rates than the Fed Sees in Late 2015

Business economists are skeptical that the Federal Reserve’s benchmark interest rate will top 1% by the end of next year as central bank officials project.
The poll of 46 professional forecasters by the National Association for Business Economics pegged the federal-funds rate target at 0.845% at the end of 2015. That reading is well below the median 1.25-to-1.50% range Fed officials themselves projected for the end of next year in forecasts released earlier this month.

Source: http://blogs.wsj.com/economics/2014/09/29/business-economists-see-lower-interest-rates-than-the-fed-sees-in-late-2015/?mod=WSJBlog

Evans Says Future Fed Rate Hike Should Be Slow, Gradual

Federal Reserve Bank of Chicago President Charles Evans in 2012.
Associated Press

NEW YORK–Federal Reserve Bank of Chicago President Charles Evans said

Source: http://blogs.wsj.com/economics/2014/09/29/evans-says-future-fed-rate-hike-should-be-slow-gradual/?mod=WSJBlog

Fed’s Fisher Worries Fed May Be Behind Curve With Rate Hikes

Federal Reserve Bank of Dallas President Richard Fisher said in a television interview Sunday he is worried the U.S. central bank will raise interest rates too late and risk letting price pressures get out of control.
The U.S. is “definitely pulling ahead of the rest of the world” in terms of growth, Mr. Fisher told Fox News Channel. “I worry we’re behind the curve at the Fed” when it comes to raising interest rates.

Source: http://blogs.wsj.com/economics/2014/09/28/feds-fisher-worries-fed-may-be-behind-curve-with-rate-hikes/?mod=blogmod
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