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By New York Times | January 2, 1992
NEW YORK -- Credit market analysts and economists say the precipitous decline in short-term interest rates engineered by the Federal Reserve Board over the last 18 months should begin to pay some dividends for the economy in the second half of this year.Few of them, however, expect much more than a tepid rebound. If they are right, short-term rates will stay low, and bond yields, which remained stubbornly high through much of 1991, will probably fall.But economic recovery, these people acknowledge, has been widely seen as being just six months away for the last three years.
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BUSINESS
By JAY HANCOCK and JAY HANCOCK,jay.hancock@baltsun.com | December 17, 2008
Fed Chairman Ben Bernanke once famously promised - half-seriously - to drop cash from helicopters if the economy got too bad. With yesterday's decision to cut the short-term cost of borrowed money to nearly zero, one would think he has almost accomplished this. One would be wrong. You can lead a banker to cheap money, but you can't make him ink a loan. Banks aren't lending in enough volume to pull the economy out of its slump. Until they do, the price of short-term credit is largely irrelevant.
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NEWS
By Robert Kuttner | March 25, 1994
ALAN Greenspan, the Federal Reserve chairman, is betting the health of the economy on a dubious theory. He thinks you can get long-term interest rates down by pushing short-term rates up.The first time Mr. Greenspan tried the trick, it backfired. On Feb. 4, the Fed raised short-term rates a quarter-point, to 3.25 percent. Long-term rates quickly rose, by about half a point.But rather than retreating, Mr. Greenspan concluded that his medicine hadn't been strong enough. This week, at the Tuesday meeting of its policy-setting Open Market Committee, the Fed hiked short-term rates another quarter-point, to 3.5 percent.
BUSINESS
By William Neikirk | November 1, 2007
WASHINGTON -- The Federal Reserve staged another pre-emptive strike against a potential economic slowdown yesterday, cutting short-term interest rates by a quarter percentage point to the lowest level in almost two years. After a half-percentage-point cut in September, the central bank continued its attack against the prospect of more economic damage from a severe housing correction that has put financial markets in turmoil, largely because of a surfeit of subprime mortgages to marginally qualified borrowers.
NEWS
March 24, 1994
When the Federal Reserve Board boosts short-term interest rates, as it has done twice since early February, long-term interest rates are supposed to fall as investors' fears of inflation wane. Such Fed tinkering with short-term rates, which it controls, is designed mainly to influence long-term rates, which it does not. But as everyone knows, financial markets do not always behave as expected.When the Fed nudged up the rates for overnight bank barrowing to 3 1/4 percent from 3 percent on Feb. 4, we suspect managers of the nation's bank were confounded when long-term rates went up, not down.
NEWS
May 18, 1994
The Federal Reserve Board's decisive increase in short-term interest rates yesterday should put a quick end to the uncertainty that has roiled world financial markets in recent months. Uncertainty is the bugaboo of investors everywhere and leads to irrational responses. While the Fed's theory that pre-emptive action would head off inflation is persuasive, its super-cautious incremental approach to its task proved counter-productive. Each quarter-point rise in the federal funds rate merely boosted expectations for a further increase.
NEWS
February 23, 1994
To House Banking Committee chairman Henry Gonzalez, he is the "foul weather forecaster" adept mainly at wrecking a recovering economy. To Senate Banking Committee chairman-presumptive, Paul Sarbanes, he is the kind of fellow so intent on killing off inflation, that if he thought the villain was inside a farmhouse he would bomb it "when, in fact, the people in the home were an American family feeling better about the economy."Who is this devil incarnate? None other than Alan Greenspan, chairman of the Federal Reserve, who dared to nudge up short term rates by a quarter-point on Feb. 4, thereby triggering a 96-point drop in the stock market.
NEWS
April 11, 1994
As the financial markets calm slightly, at least for the moment, the Federal Reserve Board must surely be assessing what went wrong and to what extent it was the culprit. Common wisdom on Wall Street puts the blame for plummeting bond and stock prices on the Fed's decisions of Feb. 4 and March 21 to nudge up short-term rates a quarter of a point at a time to 3.5 percent. But on this matter, subtle distinctions should be made.Fed chairman Alan Greenspan's theory that a "pre-emptive strike" against inflation required an increase in short-term rates was and is unassailable in the abstract.
BUSINESS
By JAY HANCOCK | March 6, 2005
SOMETHING bizarre is happening in finance. Alan Greenspan is paying attention to it, and so should we, because it's trying to tell us the future and it's not encouraging. Super-safe, government-insured bank CDs with terms as short as one year are paying 3 percent interest. Yet investors are lending billions to corporations - a riskier bet - for very long terms - riskier still - for not much more. A couple of weeks ago Merck, a pharmaceutical company, borrowed $1 billion in the bond market for 4.75 percent, a stunningly low rate that many bond pros probably thought they'd never see. Or consider that the starter price for a one-year adjustable mortgage is 4.2 percent, a rate that also leaves borrowers completely exposed to possible increases.
NEWS
October 3, 1994
America's economy as 1994's fourth quarter begins is robust despite five modest increases this year in short-term interest rates. All year long, liberal Democrats have been complaining that the Federal Reserve Board's actions in stepping up short-term rates would short-circuit the recovery. Well, it hasn't happened.In August, sales of new single family homes jumped 9.7 percent -- thus indicating once again that so long as 30-year mortgages stay under the 9 percent level the housing industry can flourish.
BUSINESS
By Janet Kidd Stewart and Janet Kidd Stewart,Chicago Tribune | September 16, 2007
Already retired and sitting on a pile of short-term investments? With lower interest rates likely coming soon, it's time to get your game plan together for squeezing the best yields out of your cash. Up to now, it has been relatively easy because short-term rates have frequently been higher than longer-term ones, taking away the advantage of tying up money in longer-term instruments. High-yielding money market accounts at banks and money market mutual funds offered by investment firms have been nearly as attractive - or even beat out - the yields on money locked away in certificates of deposit.
BUSINESS
By Andrew Leckey and Andrew Leckey,Tribune Media Services | April 8, 2007
Cool as a cucumber. That's how Federal Reserve Chairman Ben S. Bernanke comports himself. Yet the nuance in his words can quickly be transformed to fire or ice when heard by nervous investors around the globe. His acknowledgment that U.S. economic weakness could cause the Fed to consider lowering rates is capable of propelling markets to greater heights. The risk of inflation, on the other hand, with Bernanke thinking out loud about how it is still more likely that rates will be raised, can traumatize the markets.
BUSINESS
By Andrew Leckey and Andrew Leckey,Tribune Media Services | August 27, 2006
What Federal Reserve Chairman Ben S. Bernanke doesn't do can help you. The Fed's decision to at last lay off the interest rate increases that characterized Bernanke's early tenure opens the door to a new world of possibilities. Experts who hope Fed policymakers will be content to simply sit on their hands for a while are dishing out suggestions to everyday investors: Consider leaving short-term certificates of deposit behind and instead invest in three- to five-year CDs. Yields are about as good as they'll get for some time.
NEWS
By NEW YORK TIMES NEWS SERVICE | April 14, 2006
The era of cheap money might be nearing its end. Investors pushed up the yield on the U.S. government's benchmark note to more than 5 percent yesterday, its highest point in nearly four years, signaling that many borrowers will soon be paying more on mortgages and home equity loans. Driven by a stronger economy and a nearly two-year-long money-tightening campaign by the Federal Reserve, rising interest rates are expected to have the biggest impact on people who took out home loans with low introductory interest rates that are set to adjust according to market rates in the next few years.
BUSINESS
By JAY HANCOCK and JAY HANCOCK,SUN COLUMNIST | April 5, 2006
First it was terrorism. Then a stock market crash. Then rising energy prices. Are you ready for the next obstacle for consumers? Millions of cheap, teaser-rate mortgages that people took out a few years ago, when interest rates were rock-bottom, are about to get much more expensive. More than $1 trillion in mortgage debt costing only 4 percent or so - rates locked in three years ago - is about to soar in price to nearly 8 percent in some cases. With consumers already stressed by credit card payments, high gas and electric prices and meager raises, economists worry that the mortgage changes will put a new crimp in retail spending.
BUSINESS
By ANDREW LECKEY and ANDREW LECKEY,CHICAGO TRIBUNE | February 19, 2006
Banks find themselves between a rock and a hard place in 2006. That's because for the first time in more than five years, interest rates on short-term Treasury securities surpassed those of longer-term bonds. Banks traditionally make much of their profit on the difference between the short-term interest they pay on deposits and long-term rates they charge for loans. Bank profits had soared on remarkably low short-term rates until the Federal Reserve began ratcheting rates upward in 2004.
BUSINESS
By Jay Hancock and Jay Hancock,Sun Staff Writer | August 23, 1995
Federal Reserve policy-makers went home yesterday without altering interest rates. But some economists believe that the Fed will trim short-term rates another notch before the end of the year.Economist Charles McMillion believes that the Fed's Open Market Committee will lower rates as early as Sept. 26, the next time it meets."The underlying economy is still quite weak," said Mr. McMillion, president of MBG Information Services, a business analysis and forecasting firm in Washington. "Wages are still extremely weak.
NEWS
May 22, 1994
Maryland's Sen. Paul S. Sarbanes has never seen an interest-rate hike he doesn't hate. During his quarter-century in Congress, a lease he hopes to renew in November, he has been as consistent a voice for easy money as the free-silver populists of yore. Each time the Federal Reserve has nudged up interest rates since February, the TV networks knew where to look for sound-bite criticism.There is little point in trading statistical thrusts with Mr. *~ Sarbanes. For every indicator showing the economy is strong and growing smartly, he can find signs of softness.
BUSINESS
By BLOOMBERG NEWS | January 21, 2006
NEW YORK -- Citigroup Inc. said yesterday that its fourth-quarter profit from continuing operations fell 3 percent after a surge in credit-card defaults and a rise in costs to reward loyal customers. Profit fell to $4.97 billion, from $5.15 billion in the fourth quarter last year, Citigroup said. Per-share earnings were unchanged at 98 cents a share, which fell short of analysts' estimates for the third straight quarter. Analysts had expected Citigroup to have profit from continuing operations of $1 a share.
BUSINESS
By JAY HANCOCK | January 1, 2006
For the author of the Book of Revelation, trouble is four horsemen, a black sun and a bloody moon. For Nostradamus, it's a May earthquake and Saturn in the house of Capricorn. For Wall Street, it's the yield on the two-year Treasury bill exceeding the yield of the 10-year Treasury note. Say your prayers and look out below: The "inversion" is here. Or at least it was last week, when short-term interest rates surpassed long-term rates and people searched the skies for a recession, sending the Dow Jones industrial average down 165 points.
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