interest rates

This is a continuation of yesterday's post on the outlook in the banking sector. Two years ago, I said that net interest margins at banks would get crushed by the Fed's keeping interest rates low because it would cause the yield curve to…

University of Chicago Professor Raghuram Rajan, one of the few mainstream economists to predict the financial crisis, has written a very good article at Project Syndicate questioning central bank monetary policy. His main point is that…

This crisis has broken a lot of economic taboos, with central banks buying up assets and expanding their balance sheets in a desperate effort  to reflate a debt-laden private sector. The goal is to maintain economic growth, even at the risk…

I participated in a Euromoney conference on investing in inflation this afternoon. I was on a panel of five right before the closing remarks by keynote speaker Dennis Gartman and I wanted to make a few remarks about what I learned. First,…

By Sober Look High Yield corporate loans (sometimes also called "institutional", "syndicated", "leveraged", "par", or "bank" loans) continue to be in high demand. And it's not only hedge funds and CLOs (see post) who like this product.…

I was looking at Tim Duy's latest post on monetary policy and asking myself the same question he asks about normalizing the interest rate cycle. Here's what Tim wrote about getting off the zero bound: "it is perfectly reasonable to…

Here's a good essay from the St. Louis Fed, examining how effective 'permanent zero' rates are. As you know, I think permanent zero is toxic. Let's see what the St. Louis Fed is saying though. Since the late 1980s the Federal Open Market…

By Sober Look With the GSEs (Fannie Mae and Freddie Mac) forced to shrink their balance sheets (see discussion), the private sector will need to step in. As demand for mortgages increases with the growth of the US population (see…

Even before the crisis, there were some who stressed that monetary policy should keep an eye on asset bubbles and the growth of credit. This column argues that the policy of inflation targeting, used widely in the 1990s and 2000s, did…

I want to highlight the end of Fed Chairman Ben Bernanke's speech at Jackson Hole yesterday because he reiterated something he has been saying for a while now - that the Fed will do more but it won't be able to save the day by itself. I…