Inflation Worries Prompted Fed Officials to Dissent on Holding Rates Steady
Internal divisions over whether to raise interest rates intensified at Kevin Warsh’s second meeting as chairman of the Federal Reserve.
I helped bring in US bank stress tests. Now it is time to drop them
The time-consuming ritual risks misleading the public about the true health of the financial system
Britain’s quarter century: wealth and widening inequality
In this second part in our series on how the UK has changed in the past 25 years, we look at the finances of both the nation and individuals, before turning to housing and business.
The economy
Steve Schifferes, honorary research fellow, City St George’s University
FEDS Paper: Credit Surfaces and Economic Uncertainty
John Geanakoplos and David E. RappoportThe Credit Surface along the leverage dimension gives the bond spread as a function of the loan-to-value ratio. Empirically, we show that uncertainty shocks typically increase spreads and steepen the credit surface, profoundly affecting the supply of credit. Theoretically, we derive necessary and sufficient conditions for the convexity of the credit surface, and for changes in the anticipated distribution of collateral prices that lead to steepening of the credit surface.
FEDS Paper: How Firms Form Beliefs and the Implications for Inflation
Robert Minton and Hugo MonneryUsing survey data from U.S. firms, we study the primitive beliefs for pricesetting: firms’ forecasts of their own marginal costs. These forecasts are disconnected from CPI expectations, (over)react to current and past costs systematically, and underreact to aggregate shocks until costs move. We show that under empirically realistic cost beliefs the New Keynesian Phillips curve is steeper and less forward-looking. Supply shocks are more inflationary because they hit costs quickly.
Leopold Aschenbrenner vows to ‘fight another day’ after fund plunges 67% in July
Manager of AI hedge fund Situational Awareness tells investors he will learn from ‘very expensive scars’
Fuels propel 10.1% rise in retail sales for May despite volume drop
The growth of Greece’s retail sales accelerated with 10.1 percent year-on-year (YoY) rise in May, after an increase of 4 percent in the previous month, Hellenic Statistical Authority (ELSTAT) data released on Friday showed.
Ares secures biggest flagship credit fund commitments in three years
Equity commitments from investors to private credit group up more than 40% from a year ago
Taylor Wimpey cuts shareholder returns as weak housing market squeezes builders
UK housebuilder also pares guidance for home completions amid subdued sales
NatWest chief resists calls for tax rises on banks
Bumper profits from the sector fuel demands for higher UK levies
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