Bank/Thrift Supervision   |    Capital    |    CFPB    |    Deposit Insurance    |    Interchange    |    Mortgage Finance
Municipal Advisors   |    OCC-OTS Merger   |    Preemption    |    QM - QRM    |    Swaps   |    Volcker Rule    |    Full Topics List
Qualified Mortgage - Qualified Residential Mortgage
Consumer Financial Protection Bureau - CFPB
Bank/Thrift Holding Company Supervision
Deposit Insurance
Mortgage Finance
Municipal Advisors
OCC-OTS Merger
Volcker Rule
Corporate Governance
Financial Stability Oversight Council (FSOC)
Office of Financial Research (OFR)
Systemic Risk
Supervision and Oversight
Payment, Clearing and Settlement
Prudential Supervision
Trust & Securities
Asset-Backed Securities
Resolution Authority

Monday, November 21, 2016

FDIC’s Hoenig: Time to End Accommodative Rate Policy

FDIC Vice Chairman Thomas Hoenig has warned that the persistent low-interest rate environment has not boosted economic growth as much as expected and that it is contributing excessive leverage in the financial system. To break out of what he referred to as the “accommodative policy loop,” Hoenig advocated at a Washington, D.C., monetary policy conference for raising interest rates “in a clear, deliberate manner toward an announced long-run target rate or range,” and for remaining on course even in the face of short-term stress.

Meanwhile, to protect banks from “shocks” associated with the return to normal monetary policy, Hoenig repeated his frequent call for higher minimum bank capital levels, which he said could be accomplished through retained earnings. On both monetary policy and regulatory capital, he emphasized long-term strategies. He said:
Policy cannot stay on its current path of low-for-long rates and return-to-lower capital without undermining the resilience of the financial system and the economy, and without inviting harsher future adjustments, as occurred in past episodes when policy was highly accommodative.
Read the speech.

No comments:

Post a Comment

Please read our comment policy before making a comment.