Eric Rosengren, President of the Federal Reserve Bank of Boston, is the latest person to say that they believe the Fed will soon dial back economic aid provided during the pandemic. He said that next month, officials should announce they will start reducing their $120 billion in purchases of treasury and mortgage bonds “this fall.” Others say that the economy’s rapid recovery would likely mean that the Fed could start lifting its benchmark interest rate in early 2023. In other news, CNBC reports that the Senate is expected to pass the $1 trillion bipartisan infrastructure plan on Tuesday.


AP via Fox Business
Fed’s Rosengren: Stimulus wind down to begin by fall

The president of the Federal Reserve Bank of Boston added his voice Monday to a growing number of people, inside and outside the Fed, who say the central bank should soon begin to dial back its extraordinary aid for an economy that is strongly recovering from the pandemic recession.

Eric Rosengren said in an interview with The Associated Press that the central bank should announce in September that it will begin reducing its $120 billion in purchases of Treasury and mortgage bonds “this fall.” The bond buying, which the Fed initiated after the coronavirus erupted in March of last year, has been intended to lower longer-term interest rates and encourage borrowing and spending.

Rosengren also echoed some of the Fed’s recent critics by arguing that the bond purchases are no longer helping to create jobs but are instead mostly helping drive up the prices of interest-rate sensitive goods such as homes and cars. Home prices are rising at the fastest pace in nearly 20 years.

With inflation surging in recent months, the Fed has come under criticism from Republican members of Congress for continuing the bond purchases while also keeping its benchmark short-term interest rate pinned near zero. Last week, a Democratic senator, Joe Manchin of West Virginia, echoed that concern, urging Chair Jerome Powell to start tapering the bond buys.

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CNBC/Jacob Pramuk
Senate set to pass $1 trillion bipartisan infrastructure bill as Democrats move ahead with economic plan

The Senate is set to pass a $1 trillion bipartisan infrastructure plan Tuesday, a huge step for Democrats as they try to push President Joe Biden’s sweeping economic agenda through Congress.

The legislation, which includes $550 billion in new funding for transportation, broadband and utilities, is expected to get through with Democratic and Republican votes. After its passage, Senate Majority Leader Chuck Schumer, D-N.Y., plans to turn to a budget resolution that would allow Democrats to approve what they see as a complementary $3.5 trillion spending plan without Republican votes.

“After all the long, hard negotiating, the stops and starts, we’re here and it’s a good thing, a very good thing for America,” Schumer said Monday night ahead of the final vote.

The chamber is expected to vote on the bill’s passage at about 11 a.m. ET.

House Speaker Nancy Pelosi, D-Calif., has stressed she will not take up the infrastructure bill or Democrats’ separate proposal to expand the social safety net until the Senate passes both of them. The House does not return from recess until Sept. 20.

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Kitco News/Jim Wyckoff
Gold, silver see upside price corrections after recent steep slide

Gold and silver prices are moderately higher in early U.S. trading Tuesday, on normal upside price corrections after the sharp losses suffered last Friday and on Monday. The precious metals bulls appear to have stabilized their markets—at least for now. October gold futures were last up $7.40 at $1,731.80 and September Comex silver was last up $0.166 at $23.435 an ounce.

(By the way, I was on vacation last week—leading a Jeeping expedition across the U.S. Continental Divide high in the Rocky Mountains. It was a great adventure. I know I have a good job at Kitco when I really did not mind coming back to work this week to serve you, my valued Kitco reader!—Jim)

Global stock markets were mixed but mostly firmer overnight. The U.S. stock indexes are pointed mixed to weaker openings when the New York day session begins. Markets are quieter Tuesday morning, amid the summertime doldrums, when much of Europe is on holiday and many North American traders and investors are taking family vacations. Traders will be closely parsing speeches by a couple of Federal Reserve officials today, Loretta Mester and Charles Evans, looking for clues on the timing and direction of U.S. monetary policy—especially after last Friday’s much-stronger-than-expected U.S. jobs report. Separately, reports this week say the Biden Administration generally supports appointing Fed Chairman Jerome Powell to a second term.

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