The Federal Reserve decided Thursday to boost the rate banks pay for emergency loans. The action is part of a broader move to pull back the extraordinary aid it provided to fight the worst financial and economic crisis since the 1930s.
The Fed portrayed its action as moving its emergency program for banks closer to normal. But the markets saw it initially as a prelude to higher borrowing costs across the board.
source:
Today the January producer price index went up 1.4%, annualized at 16.8% -- which if it keeps up, will soon be close to the inflation rate.
Showing posts with label Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts
Thursday, February 18, 2010
Wednesday, June 17, 2009
Flow of Funds
Federal Reserve's flow of funds report
definition:
Shorthand for the Flow of Funds Accounts of the United States, a quarterly survey published by the Federal Reserve that shows the movement of funds between households, businesses, the government, and financial institutions. It also shows whether debt levels increased or decreased and what the savings rate is. The report is released during the second week of March, June, September, and December.
Report here:
The U.S. Federal Reserve’s latest Flow of Funds report demonstrated another dismal deterioration for household balance sheets in the first quarter. The ratio of net worth to disposable income fell to its lowest level in 16 years.
“This massive wealth destruction should not come as a surprise given the performance of financial markets in recent quarters: people tend to forget that financial assets account for more than three-quarters of households’ net-worth,” National Bank Financial chief economist Stéfane Marion said in a note.
The hit to households’ balance sheet explains why the savings rate has surged from 0% to close to 6%, he noted, adding that the worst appears to be over.
Given the performance of financial markets so far in the second quarter, National Bank estimates that net worth improved markedly this quarter as all of the losses of the previous six months were recouped.
The historical relationship between net worth and savings suggests the need for an additional increase in the savings rate.
definition:
Shorthand for the Flow of Funds Accounts of the United States, a quarterly survey published by the Federal Reserve that shows the movement of funds between households, businesses, the government, and financial institutions. It also shows whether debt levels increased or decreased and what the savings rate is. The report is released during the second week of March, June, September, and December.
Report here:
The U.S. Federal Reserve’s latest Flow of Funds report demonstrated another dismal deterioration for household balance sheets in the first quarter. The ratio of net worth to disposable income fell to its lowest level in 16 years.
“This massive wealth destruction should not come as a surprise given the performance of financial markets in recent quarters: people tend to forget that financial assets account for more than three-quarters of households’ net-worth,” National Bank Financial chief economist Stéfane Marion said in a note.
The hit to households’ balance sheet explains why the savings rate has surged from 0% to close to 6%, he noted, adding that the worst appears to be over.
Given the performance of financial markets so far in the second quarter, National Bank estimates that net worth improved markedly this quarter as all of the losses of the previous six months were recouped.
The historical relationship between net worth and savings suggests the need for an additional increase in the savings rate.
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