A recent study by New York Fed economists shows that high inflation hits Black and Hispanic Americans particularly hard.2 I am resolutely focused on restoring price stability, which is the foundation for a vibrant and healthy economy. The Federal Reserve's Policy Actions While monetary policy actions won't directly reduce fuel or food costs, they will reduce overall inflationary pressures that arise in an economy where demand exceeds the available supply, like we are experiencing today. Higher interest rates reduce demand for goods and services. This is especially true for those sectors that are most sensitive to interest rates, such as durable goods and housing, where we have seen the greatest imbalances between demand and supply. Therefore, in support of our goals of achieving maximum employment and inflation at a rate of 2 percent over the longer run, the FOMC last month decided to raise the target range for the federal funds rate to 1‑1/2 to 1-3/4 percent and said it anticipates that ongoing increases in the target range will be appropriate.3 In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May.4 Raising the federal funds rate by 75 basis points was the largest single increase that the Federal Reserve has put forth since 1994.
Lars Nyberg: Hedge funds and the recent financial turmoil Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Nordic Hedge Fund Investment Forum, Stockholm, 28 January 2008. *  *  *  Hedge funds have come to play an increasingly important role in the financial system. In the past decade the assets managed have quadrupled and now stand at around USD 2 000 billion; growth of between 25 and 30 per cent per year. 1 But it is not just the fact that the hedge funds have grown in number and size that makes them important. They also have different trade strategies and more liberal investment rules than many other types of investor. This makes them important players on several of the world’s financial markets. Many have said (and some have perhaps hoped) that hedge funds would cause the next financial crisis. As we know, the past autumn saw a number of unpleasant surprises in the financial markets. In this context I believe it may be of interest to note that the hedge funds have not contributed to amplifying the problems in the market. To date, if anything they have had the reverse effect, that is, their actions have generally had a stabilising effect in the markets. 2 At the same time, many hedge funds, like many other financial market agents, can surely learn some lessons from recent events. I will reflect on this today. This also brings me to the current animated debate on the regulation of hedge funds.