Fed officers mentioned adjusting cash market assist in April, minutes present

By Jonnelle Marte

May 19 (Reuters) – The US Federal Reserve may need to adjust the instruments used to keep its policy rate within the intended range in the coming months if the cost of borrowing continues to fall overnight in the open market, such as an indicator the last central bank meeting signaled on Wednesday.

Policymakers also received a detailed briefing last month on the pros and cons of sustained support to money markets, according to the minutes.

The central bank began to intervene in the overnight lending markets in September 2019 when a lack of reserves led to a spike in short-term lending rates. However, for the past few weeks, the markets have been plagued by the opposite problem: too much cash.

Firms floating in excess reserves flock to the New York Fed facility to enter into reverse repurchase agreements or reverse repo contracts where they can temporarily park their money.

Money market funds and other eligible companies provided the Fed with $ 294 billion in cash overnight on Wednesday, up from around $ 100 billion at the time of the meeting and above levels at the start of the coronavirus pandemic in March 2020 had been achieved.

The Fed may consider adjusting managed rates “in the coming months” if downward pressure on overnight rates continues, Lorie Logan, manager of the System Open Market Account, told policy makers.

The central bank could respond by increasing the interest it pays banks on excess reserves (IOER) from 0.10% or adjusting the overnight reverse repo rate for non-banks, which is currently 0%.

MONETARY MARKET SUPPORT

In an in-depth discussion of the Fed’s efforts to strengthen money markets, policy makers also discussed the potential benefits and risks of having ongoing support from a permanent facility that financial firms can leverage when needed.

“Many participants” noted that a standing repo facility could provide the central bank with a way to automatically respond to market pressures, which can be difficult to predict. Still, a “pair” of participants said the Fed could save money by running repo operations at short notice when needed.

Policy makers previously discussed the durability of the agreement at the October 2019 meeting, but decided to wait and raised questions about what fees should be charged and which companies should be eligible. Some of these questions were also raised last month. (Reporting by Jonnelle Marte; Editing by Jonathan Oatis)

Evers adjusting spending plans after Rescue Plan cash lower than anticipated

MADISON (WKOW) – Governor Tony Evers’ only definitive answer on Wednesday to questions about how his administration will adjust to Wisconsin to receive $ 700 million less than expected under the US bailout is that it has no impact on previously announced plans for small business relief efforts.

Wisconsin learned Tuesday that it would receive $ 2.5 billion through the American Rescue Plan Act. The Congressional Budget Office previously estimated the state would receive $ 3.2 billion.

Evers, the vetoed a bill In March, this would have given Republican-controlled lawmakers a say in how the money was used. Previously, he had split the proposed spending into three buckets:

  • $ 2.5 billion in economic relief, including business grants
  • $ 200 million for broadband expansion
  • $ 500 million for ongoing pandemic response.

Given the proposed spending skeleton, the loss of $ 700 million resulted in the Evers government being reformed.

“Obviously that $ 700 million makes a difference,” Evers said. “That’s $ 700 million. We can’t help people, our small businesses, and others recover as quickly as we wanted.”

Evers later, in the same answer to a question about how the reduction would affect the state’s relief plans, indicated that helping small businesses would remain high on the priority list.

“When we think of the areas of the state that are struggling so hard, it’s small businesses, businesses on Main Street, bars, restaurants and so on,” Evers said. “We will continue to make sure they are a priority.”

Britt Cudaback, director of communications for the governor’s office, said Wednesday the disappointing news would likely lead the government to shrink its proposed spending in all three buckets, but added that it would have no impact on previously announced corporate relief plans .

These included $ 420 million for Small Business Recovery Grant, $ 50 million for Main Street Business Grant, $ 50 million for Just Recovery, and $ 50 million for the Beyond the Classroom Initiative “.

The government had also pledged $ 50 million for the tourism industry, which Cudaback said would not be affected by the reduction either.

The estimated $ 700 million loss will also cause problems for the ongoing state budget process.

UW-Madison political science professor Barry Burden said the matter had been further tarnished by clarifying that $ 2.5 billion would be split into two doses. One half comes from, the other half comes after another year.

“A second amount waiting to be received by the state next year complicates matters in my opinion,” said Burden. “Because we really don’t know exactly what the state’s budget situation will look like in 12 months.”

Is it worth vaccinating?

While Ohio Governor Mike DeWine announced on Wednesday that the state would be holding five $ 1 million lotteries to reward vaccinated residents, Evers said he wouldn’t rule anything out if asked if he would consider using government funds for a vaccination incentive program.

“We will do everything in our power to get people to be shot in the arms,” ​​said Evers.

As for the money earmarked for ongoing pandemic response, Cudaback said those funds would cover continuation of efforts including contact tracing and clinics, regardless of the final amount.

Health Department officials said Wednesday they would enter a phase where fewer people would be vaccinated over an extended period as demand for the vaccine has hit a wall in recent weeks and about 45 percent of the state’s population is at least receiving it have a dose.

Sports activities and leisure manufacturers adjusting to empty arenas

Andrew Cuomo, Governor of New York announced On Wednesday, sports arenas with more than 10,000 seats could accommodate fans with a capacity of up to 10%, provided the COVID-19 guidelines were followed and the participants had negative test results.

It’s a nice start, but Madison Square Garden, with a few thousand people, is still almost empty.

Especially for a company that pays teams to showcase their brand in arenas and stadiums.

Peter Laatz, global director of sponsorship consultancy IEG, said sponsorship for sports and entertainment in the United States is around $ 26 billion a year. And what was paid for before the pandemic isn’t fully delivered because of all those empty spaces.

“We are currently facing a $ 14 billion gap that brands and real estate must agree on how to reconcile,” he said. “And it’s not an easy thing.”

He said the teams are trying to keep their contracts with brands by, for example, putting logos in places they haven’t been before so that they can at least be seen on TV.

The New York Islanders ice hockey team now has a few stickers, UBS and Northwell Health, on the side of the players’ helmets.

But that only goes so far.

“Brands we work with tell us, ‘If we wanted all these branded products, we would have had them in our store. I want money back or I want an extra year, ”said Laatz.

“I want a refund!” It’s about the last thing team owners want to hear who are already losing ticket and concession revenues.

But Nicky Lewis, an assistant professor at the University of Kentucky, said that sports teams and leagues, and therefore the brands they work with, now have an opportunity to rethink how they interact with fans.

“Interacting with personal viewers through mobile media, digital media and personal media – that’s all gone,” she said. “And so you have the screen at home, and we still love watching our sports on big screens, but you have to meet them on the mobile media device too.”

And Angeline Close Scheinbaum, professor of sports marketing at Clemson University, said when people are back in the stands, they can expect the teams to keep hitting them with information on their phones.

“What are the waiting times at this special concession stand? Or give them little push warnings to remind them of concessions, ”she said.

She said that will be too much for some fans, but the way people watch games is different these days, whether it’s at home or in person. Marketers will find these opportunities.

“Especially when the game itself is in a doldrums, it becomes an additional marketing and engagement opportunity where you have consumers in a place where they are cognitively and emotionally heightened,” said Close Scheinbaum.

Then they’ll likely buy more stuff, like another $ 12 beer or a $ 10 hot dog.

What if some aid money is not spent?

Depending on how you count it, the federal government has so far provided about $ 4 trillion in pandemic-related relief, from loans to tax cuts to new spending. However, Marc Goldwein, Senior Vice President of the Committee on Responsible Federal Budget, said: “There is still a lot of money in the pipeline. ” Leftover PPP money sits on an account. But other issues, like unemployment, are more like Congress, which says, “We’ll spend it if we have to.” But whether this or that program outputs everything that was expected is a very different argument than the total needs of the economy.

How should companies compensate their employees for work-from-home costs?

A new survey from the compensation software and data company Pay scale found that less than 25% of organizations granted grants to employees who worked from home in the past year. How companies do some amount of work from home permanentlyYou need to think carefully about your compensation policies as scholarships can be difficult to find out, said Shelly Holt, chief people officer at PayScale. Also a study The University of Washington found that approximately 75% of Americans cannot work entirely from home. People who work in healthcare and grocery stores, among other things.

What is Budget Balancing and How Could Democrats Use It to Get Goodbye to COVID Aid?

Both President Joe Biden and the Democrats in Congress have announced that they will pass the bill without Republican support using a process known as budget balancing. In the Senate, “the final vote on a bill is passed by a simple majority,” said Kelly Whitener, associate professor at Georgetown University. But under the rules of the Senate, you cannot get that vote unless at least 60 senators agree to end the debate. Budget balancing is a way to get around this but only in very specific cases. It’s a process that was created in a 1974 Budget Act that allows senators to put a bill to a vote by a regular old majority.

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