Euro zone consumer confidence dropped to -16.5 in September, missing forecasts and extending its August decline. On the same day, New York Fed President John Williams and Fed Vice Chair Philip Jefferson separately defended the US central bank's rate-control toolkit and its emergency lending facility.
Euro zone consumer confidence fell to -16.5 in September, a one-point drop from -15.5 in August and steeper than the -16.0 economists surveyed by Reuters had forecast, according to European Commission flash estimates released Tuesday. On the same day, two Federal Reserve officials separately defended the US central bank's approach to managing short-term rates and market liquidity.
Euro zone sentiment misses forecasts
The euro zone consumer morale indicator fell 1.0 point to -16.5 this month, the European Commission said, extending its slide from -15.5 in August. Economists surveyed by Reuters had forecast a smaller drop to -16.0, making the reading steeper than anticipated. Across the wider European Union, consumer sentiment fell 0.8 points to -15.8 over the same period.
Williams says rate-control tools work well
New York Fed President John Williams told a Treasury market conference at the New York Fed that supplying "ample" reserves with the current interest rate toolkit has proven highly effective at delivering interest rate control and supporting the smooth functioning of core financial markets. He did not address the rate outlook and was not scheduled to take questions after his remarks. Williams said the framework is not fixed and can adapt as markets evolve, noting the Fed under Chairman Kevin Warsh has task forces reviewing the central bank's communications, data evaluation, and balance sheet.
Discount window reforms bolster liquidity, Jefferson says
Fed Vice Chair Philip Jefferson said recent upgrades to the emergency lending facility make it easier for banks to use, supporting liquidity and financial stability. According to Reuters: "the discount window serves as a shock absorber during periods of market stress", Jefferson said in remarks prepared for the same Treasury market conference. A self-service portal now handles 60% of discount window loans, letting banks communicate with their regional Fed bank electronically instead of by phone. Jefferson did not address the economic or monetary policy outlook.
Sources: Investing.com, Investing.com, Investing.com
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