Fed's Fisher Fears Bernanke 'Painted Ourselves Into a Corner'
Dallas Federal Reserve Bank President Richard Fisher said his votes on the central bank's policy panel in 2014 will reflect his concern that the Fed's bond-buying tactics will stoke inflation and expose the institution politically.
In an interview conducted on Dec. 2 but posted to the Internet as a podcast on Monday, Fisher called the excess reserves piling up in the U.S. banking system under outgoing Fed Chairman Ben Bernanke potential "tinder" for inflation.
He said the central bank's plans to eventually unwind its extraordinary policies relied on an untested "theoretical exit strategy
Fed Reverse Repo Facility Usage Soars, Rates Low at Year End
Usage of the Federal Reserve’s fixed-rate reverse repo facility surged before the end of the year as rates for borrowing and lending securities slide and banks shored up balance sheets.
The Fed Bank of New York drained $197.8 billion today, the largest amount in a test of its fixed-rate reverse repo facility that began operation in September, through 102 bidders. Yesterday, it drained $102.6 billion from the banking system with 75 bidders.
The facility, which the central bank is testing as tool for when it eventually reverses its unprecedented monetary accommodation, is a place for investors to put cash during the final week of the year. Typically at the end of the year, dealer balance sheets come under pressure, making it harder for them to take cash in the repo market, historically driving repo rates lower. This is the first year-end where investors have the option to do repos with the Fed, providing an alternative place to park cash of the end of the calendar year.
In a reverse repo, the Fed lends securities for a set period, temporarily draining cash from the banking system. At maturity, the securities are returned to the Fed, and the cash to its counter-parties.
According to Bill King, "The fact that the Fed has executed almost $400 billion of reverse repos over the past several days is the best evidence that there is too much liquidity in the system."
Turkey’s Silver Imports Surge to Most Since 1999 as Prices Slide
Turkey’s silver imports climbed in December to the highest since at least 1999 and inbound shipments of gold rose to the most since July as the metals capped their biggest annual decline in more than three decades.
Imports of silver gained to 41.6 metric tons last month, 36 percent more than in November and above September’s amount of 39.9 tons, according to data on the Istanbul Gold Exchange’s website going back to 1999. That took the full year figure to 227.8 tons, 60 percent more than 2012 and compared with 42.1 tons in all of 2011. Gold imports increased 64 percent in December to 31.6 tons, the data show.
“Some people took the opportunity of lower prices and bought remarkable amounts of gold and silver,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said today by phone. “Generally, prices are very attractive. Demand is very robust in Turkey and the Arab world as well.”