THE FEDERAL RESERVE

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BRIEFING ROOM

Remarks by President Biden Before the 76th Session of the United Nations General Assembly

SEPTEMBER 21, 2021

United Nations Headquarters

New York, New York

10:01 A.M. EDT

THE PRESIDENT:

One of the most important ways we can effectively enhance security and reduce violence is by seeking to improve the lives of the people all over the world who see that their governments are not serving their needs.

Corruption fuels inequality, siphons off a nation’s resources, spreads across borders, and generates human suffering.

It is nothing less than a national security threat in the 21st century.

Around the world, we’re increasingly seeing citizens demonstrate their discontent seeing the wealthy and well-connected grow richer and richer, taking payoffs and bribes, operating above the law while the vast majority of the people struggle to find a job or put food on the table or to get their business off the ground or simply send their children to school.

CNBC

"Dallas Fed President Kaplan to retire early on Oct. 8, citing trading disclosure ‘distraction’"

Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM

PUBLISHED MON, SEP 27 2021

KEY POINTS

* Dallas Fed President Robert Kaplan said Monday he is stepping down from his position following a controversy over his stock holdings.

* Boston Fed President Eric Rosengren, who had come under similar scrutiny, announced earlier in the day that he was retiring.

Dallas Federal Reserve President Robert Kaplan became the second regional central bank leader to resign Monday, saying he was stepping down early following a recent controversy over stock market trades he made.

Kaplan’s early retirement follows an announcement earlier in the day from Boston Fed President Eric Rosengren, who said he will leave as well but cited health concerns and not the issue over his investment portfolio activity.

“The Federal Reserve is approaching a critical point in our economic recovery as it deliberates the future path of monetary policy."

"Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve’s execution of that vital work,” Kaplan said in a statement.

His retirement takes effect Oct. 8.

The resignations come a day before Fed Chair Jerome Powell is to spend two days on Capitol Hill updating legislators on the Fed’s efforts to combat the economic impact of the Covid-19 pandemic.

Controversy had swirled over the issue following disclosures that Kaplan in particular had been executing large-dollar trades in big-name companies such as Amazon, Apple and Delta Airlines.

The Wall Street Journal first reported the trades.

Subsequent to the disclosures, both Kaplan and Rosengren said they would be selling their stocks to avoid the appearance of conflict.

Questions were raised because the Fed has conducted trillions of dollars in asset purchases aimed at helping markets function, and has bought corporate bonds from mega-cap companies including Apple.

Kaplan insisted he had done nothing wrong.

“During my tenure, I have adhered to all Federal Reserve ethical standards and policies,” he said in his monthly statement.

“My securities investing activities and disclosures met Bank compliance rules and standards.”

Still, the issue has reverberated through the Fed, with officials pledging to tighten rules so that such potential conflicts don’t happen again.

“We need to make changes, and we’re going to do that as a consequence of this,” Powell said last week.

“This will be a thorough going and comprehensive review."

"We’re going to gather all the facts and look at ways to further tighten our rules and standards.”

Powell vowed that changes would be made.

“I want to be able to look back on this years from now and know that we rose to meet this challenge and handled the situation well and that what we did made a lot of sense and protected the public’s interest and the institution that we’re all a part of,” he said.

Powell on Monday wished Kaplan well and praised his work at the Dallas Fed.

“He has been a passionate and forceful public voice on a wide range of issues, including the critical value of early childhood education and literacy,” the chairman said in a statement.

Meredith Black, the first vice president at the Dallas Fed who herself was planning on retiring, will serve as interim head for the district until a permanent successor is chosen.

https://www.cnbc.com/2021/09/27/dallas- ... ction.html

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REUTERS

"Fed's highest priority is to get people back to work: Kashkari"

By Reuters Staff

SEPTEMBER 27, 2021

(Reuters) - The Federal Reserve’s “highest priority” is to make sure millions of Americans now out of a job can get back to work, Minneapolis Federal Reserve Bank President Neel Kashkari said in a speech taped Friday and released Monday.

“Putting Americans back to work...to me that’s our highest priority,” Kashkari said at the Community Foundations Leading Change Fall Forum, adding that “of course” the Fed will pay close attention to inflation and keep that in check.

Recent high readings of inflation do not signal permanently higher inflation, he said: “We don’t want to overreact to short-term price movements.”

Reporting by Ann Saphir

https://www.reuters.com/article/usa-fed ... SS0N2O4009

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REUTERS

"Two Fed officials depart amid scrutiny over investment trades"

By Jonnelle Marte, Ann Saphir, Howard Schneider

SEPTEMBER 27, 2021

WASHINGTON (Reuters) - Two Federal Reserve officials that came under scrutiny for investment trades they made last year announced their retirements on Monday.

Dallas Fed Bank President Robert Kaplan said on Monday afternoon that he will retire on Oct. 8, citing the “distraction” of the controversy that circled his investment decisions.

The announcement came after Boston Fed President Eric Rosengren announced earlier in the day that he will retire on Thursday, Sept. 30, citing a long-term health condition.

The two Fed officials faced public scrutiny for investment trades made last year that raised questions about the effectiveness of Fed ethics rules.

Both faced calls for their resignations because of actions undertaken at a time when millions of Americans lost their jobs and the Fed was taking historic steps to bolster financial markets and the economy.

Kaplan made multiple million dollar trades in individual stocks in 2020 and Rosengren invested in real estate investment trusts, according to recent financial disclosures.

The financial disclosures did not look strikingly different from prior years, and both officials said their investment trades were cleared by ethics officers.

But the actions were viewed as problematic for a year in which the Fed also took unprecedented actions to stabilize financial markets and the economy in the wake of the rapidly-unfolding pandemic.

When asked if he trusted the two regional Fed bank presidents to do their jobs, Fed Chair Jerome Powell, who has launched a broad review of Fed rules, said last week that “in terms of having confidence and that sort of thing, I think, no one is happy.”

‘DISTRACTION’

While Rosengren would have had to retire next June in any event because he would have reached the Fed’s mandatory retirement age of 65, Kaplan still had several years before he would have aged out of the job.

In a statement that did not mention the investment controversy, Rosengren revealed that he qualified for the kidney transplant list in June of 2020 and wanted to make “lifestyle changes” to protect his health.

Kaplan said in a statement that the questions over his investments had become a “distraction” for the central bank.

“The Federal Reserve is approaching a critical point in our economic recovery as it deliberates the future path of monetary policy,” Kaplan said.

“Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve’s execution of that vital work.”

The last such high-profile departure from the Fed was in 2017, when then-Richmond Fed president Jeffrey Lacker resigned while acknowledging he had, five years earlier, been the source of information used in a report by Medley Advisors that included at that point unreleased information.

Lacker took explicit blame, saying his “conduct was inconsistent with...confidentiality policies.”

Neither Rosengren or Kaplan have acknowledged any breach of the Fed ethics rules that require them to abide by certain trading practices and avoid even the appearance of a conflict of interest.

The back-to-back resignations leave a suddenly wider opening for a potential overhaul of Fed leadership.

U.S. President Joe Biden is assessing whether to reappoint Fed Chair Jerome Powell and is poised to nominate as many as three others to the seven-member Washington-based Board of Governors, a group long criticized for mostly being comprised of white men.

The departure of the two Fed bank presidents could allow for a more diverse group of regional bank presidents, who are chosen by local boards of directors with the approval of the Fed governors.

Currently seven of 12 bank presidents are white men, three are white women, and two are non-white men.

Reporting by Howard Schneider, Ann Saphir, Jonnelle Marte and Lindsay Dunsmuir; Editing by Raissa Kasolowsky, Andrea Ricci and Aurora Ellis

https://www.reuters.com/article/usa-fed ... SL1N2QT0ZZ

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REUTERS

"Fed's Evans sees 2.4% inflation in 2024, 'gentle incline' in rates"

By Reuters Staff

SEPTEMBER 27, 2021

Sept 27 (Reuters) - Chicago Federal Reserve Bank President Charles Evans on Monday said he expects inflation to rise to 2.4% by 2024 but interest rates to be only on a “gentle incline” upward, a view that contrasts with that of some other policymakers who believe a faster pace of rate hikes will be needed.

“We are trying to solidify strong, firm inflation expectations that allow for 2% over time as an average,” Evans told reporters on the sidelines of the National Association for Business Economics.

In his view, he said, “the brief period of higher inflation... is helpful for reinforcing inflation expectations.”

(Reporting by Ann Saphir; editing by Chizu Nomiyama)

https://www.reuters.com/article/usa-fed ... SS0N2LF02F

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REUTERS

"Fed will allow labor markets to 'run their course': Bostic"

By Reuters Staff

SEPTEMBER 27, 2021

Sept 27 (Reuters) - Atlanta Federal Reserve Bank President Raphael Bostic on Monday reiterated the U.S. central bank’s commitment to making sure every American who wants a job can have one.

“Without clear data demonstrating that an inflationary problem has arrived and is likely to last, we will allow labor markets to run their course, which can further our pursuit of long-run maximum employment,” Bostic said in an essay released late in the day.

Though recent data shows inflation has been rising, long-run expectations remain “reasonably” near the Fed’s 2% goal.

“I am not convinced we are staring down a lengthy bout of troublesome, fundamental price inflation,” he said.

(Reporting by Ann Saphir, Editing by Rosalba O’Brien)

https://www.reuters.com/article/usa-fed ... SS0N2O400C

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REUTERS

"Fed's Powell faces heated questions on trading, regulation and diversity"

By Jonnelle Marte

SEPTEMBER 28, 2021

(Reuters) - U.S. Federal Reserve Chair Jerome Powell faced heated questions on Tuesday from senators criticizing the central bank’s trading guidelines, financial regulation and diversity efforts.

Speaking to members of the U.S. Senate Banking Committee a day after two regional Fed presidents being scrutinized for their investment trades announced their retirements, Powell defended the central bank and vowed to improve policies where needed.

“This is a blow to the image of the central bank,” Senator Raphael Warnock, a Democrat from Georgia, said about the trading controversy.

He asked Powell about what steps he is taking to protect the “impartiality” of the Fed.

This followed some criticisms shared at the start of the hearing, when Democratic Senator Sherrod Brown, the head of the U.S. Senate Banking Committee, said he plans to introduce legislation that would ban Fed officials from owning individual stocks.

Powell, who earlier this month ordered a review of the Fed’s ethics rules, added that the central bank is also examining the trades done by regional Fed presidents to make sure they were legal and in compliance with current ethics guidelines.

“Even if it appears to be the case that these trades were in compliance with existing rules, that just tells you the problem is the rules and the practices and the disclosure needs to be improved,” Powell said in response to a question.

“We will rise to this moment and address this.”

The Fed chief, whose term expires in February, also fielded harsh words from Democratic Senator Elizabeth Warren of Massachusetts, who called him a “dangerous man” to head the Fed and said she would vote against his reappointment.

“Renominating you means gambling that ... a Republican chair who has regularly voted to deregulate Wall Street won’t drive this economy over a financial cliff again,” said Warren, a long-time critic of the Fed’s oversight of Wall Street.

“I just don’t think that’s a risk worth taking.”

The White House has not yet announced a decision on whether to reappoint Powell or choose an alternative.

Reporting by Jonnelle Marte; Editing by Andrea Ricci

https://www.reuters.com/article/usa-fed ... SKBN2GO22O

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REUTERS

"Fed's Bostic: U.S. job market in a "jumble," but economy on firm footing"

By Reuters Staff

SEPTEMBER 28, 2021

WASHINGTON (Reuters) - The U.S. labor market is in a “jumble” as workers sort out child care and navigate an ongoing pandemic, but the country remains on track for a full recovery, Atlanta Fed president Raphael Bostic said on Tuesday.

“There is a lot of shuffle and a lot of jumble and a lot of turbulence” as people juggle family responsibilities with a return to work, companies turn to automation amid labor shortages, and the coronavirus crisis continues, Bostic said in comments to the Mid-Size Bank Coalition of America.

“But at the end of the day the trajectory of the economy is solid."

"My models and the data I am seeing suggest we are on firm footing towards a full recovery and momentum is going to continue strong even amidst the rise of Delta.”

Reporting by Howard Schneider; Editing by Sonya Hepinstall

https://www.reuters.com/article/usa-fed ... SKBN2GO28V

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CNBC

"Fed Chair Powell calls inflation ‘frustrating’ and sees it running into next year"

Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM

PUBLISHED WED, SEP 29 2021

KEY POINTS

* Fed Chairman Jerome Powell still expects inflation to ease eventually, but said he sees the current pressures running into 2022.

* The central bank leader said the current inflation pressures are “frustrating.”

Federal Reserve Chairman Jerome Powell still expects inflation to ease eventually, but said Wednesday that he sees the current pressures running into 2022.

Assessing the current economic situation, the Fed chief said during a panel discussion hosted by the European Central Bank that he was “frustrated” that getting people vaccinated and arresting the spread of the Covid delta variant “remains the most important economic policy that we have.”

“It’s also frustrating to see the bottlenecks and supply chain problems not getting better — in fact at the margins apparently getting a little bit worse,” he added.

“We see that continuing into next year probably, and holding up inflation longer than we had thought.”

Inflation by the Fed’s preferred measure is running at its hottest pace in about 30 years.

Powell and most of his colleagues say they expect the current pressures to decline back to trend as supply chain bottlenecks ease and demand goes back to pre-pandemic levels.

He said Wednesday that 2022 should be “quite a strong year” for economic growth.

However, officials as of late have acknowledged that the current inflation conditions have not eased the way the Fed thought they would.

The Federal Open Market Committee last week collectively raised its projection for 2021 core inflation to 3.7% from the 3% forecast in June.

“The current inflation spike is really a consequence of supply constraints meeting very strong demand, and that is all associated with the reopening of the economy, which is a process that will have a beginning, a middle and an end,” Powell said.

“We see those things resolving,” he said.

“It’s very difficult to say how big those effects will be in the meantime or how long they will last.”

Powell’s continued expectations that inflation is temporary were echoed by European Central Bank President Christine Lagarde, who sat on the panel with Powell, Bank of England Governor Andrew Bailey and Bank of Japan Governor Haruhiko Kuroda.

“We monitor very carefully, but we certainly have no reason to believe that these price increases we are seeing now will not be largely transitory going forward,” Lagarde said.

Should that not be the case, Powell said the Fed is prepared to act.

Central bank officials already have indicated they are inclined to begin tapering their monthly asset purchases by the end of the year, though interest rate increases are not expected until at least the end of 2022.

“Of course, if we were to see sustained higher inflation and that were to become a serious concern, I would tell you the FOMC would certainly respond and we would use our tools to ensure that inflation runs at levels that are consistent with our goal,” Powell said.

https://www.cnbc.com/2021/09/29/fed-cha ... -year.html

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REUTERS

"Powell: "Tension" between jobs, inflation is the chief challenge facing Fed"

By Howard Schneider

September 29, 2021

Sept 29 (Reuters) - Resolving "tension" between high inflation and still-elevated unemployment is the most urgent issue facing the Federal Reserve right now, Fed Chair Jerome Powell said Wednesday, acknowledging the central bank's two goals are in potential conflict.

"This is not the situation that we have faced for a very long time and it is one in which there is a tension between our two objectives..."

"Inflation is high and well above target and yet there appears to be slack in the labor market," Powell said at a European Central Bank forum, an apparent reference to the 1970s bout of U.S. "stagflation" that combined high unemployment and fast-rising prices.

The United States is more than 5 million jobs short of where it was before the pandemic.

At the Fed's most recent meeting policymakers lifted their inflation forecasts for this year to 4.2% - more than twice the targeted level of 2%.

They see that pace easing in 2022 to 2.2%, modestly above where they had pegged it in their previous projections in June.

Powell said the Fed's working "hypothesis" is that inflation will largely ease on its own as the global economy returns to normal after a rocky reopening from the pandemic, a baseline that lets the Fed chief refer to interest rate increases as still "a ways off."

But asked about his biggest concerns right now, Powell referred to the possible clash between the Fed's two goals of stable prices and full employment, a situation that could force the Fed to make trade-offs between the two by raising interest rates to tame prices at a time when it still wants to encourage job growth.

"Managing through that over the next couple of years is the highest and most important priority and it is going to be very challenging," Powell said at a virtual event alongside the heads of the ECB, Bank of Japan and Bank of England.

MANAGING TRADE-OFFS

His comments are among the most direct the Fed chief has made on a topic policymakers have tried to downplay: That current high inflation, if it persists, could force them to begin to tighten monetary policy before they deliver on a promise to reach "maximum employment" and fully heal the job market of its pandemic scars.

Typically the rates of unemployment and inflation are inversely related, partly due to monetary policy and the use of interest rates to either stimulate or depress the demand for goods and services, thus influencing prices and hiring.

That relationship seemed to weaken in recent years, with low inflation existing side by side in the United States with very tight labor markets and low unemployment.

But the global supply shocks delivered by the pandemic has at least temporarily brought back the old dynamics, pushing the availability of goods and services out of kilter with the demand for them.

The issue now is how long that dislocation lasts, and whether inflation proves so persistent that it outruns improvement in the job market and forces the Fed to begin raising interest rates while unemployment is still high.

The risks around inflation have already prompted half of Fed officials to pencil in interest rate increases beginning next year, and while the job market may make marked progress by then Powell in his remarks said the difficulties around the world's economic reopening had become "frustrating."

"It is frustrating to acknowledge that getting people vaccinated and getting Delta under control 18 months later still remains the most important economic policy that we have," Powell said in response to a question on the U.S. economic outlook.

"And it's also frustrating to see the bottlenecks and supply chain problems not getting better, in fact at the margin apparently getting a little bit worse."

"We see that continuing into next year probably and holding inflation up longer than we had thought," Powell said.

"But ultimately the outlook for next year among my colleagues and me at the Fed for next year is quite a strong year with growth quite above trend and unemployment reaching significantly lower levels than now."

Fed officials at their meeting earlier this month downgraded their views of U.S. gross domestic product growth for this year but upgraded estimates for next year, reflecting expectations that activity for the balance of this year will be stymied by supply issues and those restraints will fade in 2022.

Reporting By Dan Burns and Howard Schneider; Editing by Andrea Ricci

https://www.reuters.com/business/feds-p ... 021-09-29/

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REUTERS

"Fed's Daly sees taper bar met by year end, no rate hike in 2022"

By Reuters Staff

SEPTEMBER 29, 2021

(Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Wednesday said she feels the U.S. central bank will be able to begin reducing the pace of its monthly asset purchases by year end, but believes an interest rate hike is still a “long way” away.

“By the end of the year, if things continue as I expect them to with the economy, then I would expect us to hit that ‘substantial further progress’ goal, threshold, by later this year and it would be appropriate to start dialing back,” she told reporters after a virtual talk at UCLA.

The Fed has set a different, higher bar for raising interest rates, including reaching full employment and inflation at 2% and on track to stay durably above that level for some time.

“If we should get there in the time frame of next year that would be a tremendous win for the economy,” she said, but “I don’t expect that to be the case.”

Some 6 million Americans are still on the sidelines of the labor market, she said.

Though inflation has stayed high longer than she had expected and upward pressures may not recede until well into next year, it’s “appropriate” to wait and see how things go.

Reporting by Ann Saphir; Editing by Chizu Nomiyama

https://www.reuters.com/article/usa-fed ... SS0N2O4008