More Rate Hikes Ahead, Fed Governor Says
TORONTO - The U.S. economy is growing too fast, and monetary policymakers are likely to continue raising interest rates to keep inflation from accelerating, Federal Reserve Governor Laurence Meyer said Wednesday."Because there are still limits to how fast the economy can grow without further straining labor markets and to how low the unemployment rate can go without triggering higher inflation, there are limits to monetary policy's tolerance for above-trend growth and for further labor market tightening," Mr. Meyer told the Toronto Association for Business and Economics.
By his estimate, the economy has been growing as much as 1 percentage point too fast. The economy accelerated to a 7.3% annual growth rate in the fourth quarter and has expanded at more than 4% a year for the past three years, government figures show.
The Federal Open Market Committee, which has raised the overnight bank lending rate five times since June in quarter-percentage-point steps, is acting preemptively in case the economy's strength translates into higher prices for goods and services, Mr. Meyer said.
The FOMC is able to take a gradual approach, however, because "there is little evidence" that inflation or outsized wage gains have taken root, he said.
- Bloomberg News
E-Trade: Loss Narrows, Revenue Burgeons
MENLO PARK, Calif. - E-Trade Group, the no-frills discount broker, on Tuesday said it narrowed its operating loss during its fiscal second quarter, to $23.2 million or 80 cents a share, thanks to a surge in new accounts and increased trading volume.E-Trade, which touted the results for the quarter ended March 31 as "break-even," had reported an operating loss of $34.9 million for its first fiscal quarter. The addition of 603,000 net new accounts and 14.4 million transactions during the quarter helped shave losses, the company said. E-Trade now has 2.6 million active accounts with about $65 billion of customer assets.
Meanwhile, net revenue was up 152% from the same period a year ago, to $407 million. The company recently has spent heavily on marketing and expansion, both in the United States and overseas. Last quarter it completed the acquisition of Telebanc Financial Corp.
- Niamh Ring
CompuBank Hires Exec to Be President
HOUSTON - CompuBank has hired First Data Corp. executive Todd Strubbe to be its president and chief operating officer.Mr. Strubbe was managing director of systems architecture and product development for First Data Resources, a division of the Atlanta-based credit card transaction processor. Before joining First Data five years ago, he worked at the management consulting firm McKinsey & Co.
"Todd brings a combination of practical industry experience and innovative thinking necessary to support our goal of building a true Internet platform," said Frank Goldberg, chairman and chief executive officer of CompuBank.
CompuBank, founded in October 1998, was the first Internet-only bank to get a charter from the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. coverage.
- Megan J. Ptacek
HSBC Hints It May Sell Investment Bank
THE HAGUE, the Netherlands - The head of HSBC Holdings PLC, which plans to buy Credit Commercial de France SA for $10.5 billion, suggested Wednesday that it may sell CCF's investment bank, CFF Charterhouse.Though the investment bank is a "valuable part" of CCF, "we will look at all possibilities" regarding its future, Sir John Bond, chairman of Europe's largest bank by market value, told reporters at the annual meeting of the Institute for International Finance. Mr. Bond declined to elaborate.
Charles de Croisset, CCF's chairman and chief executive, told his bank's annual meeting in Paris, however, "there's nothing HSBC wants to sell," because the two organizations are so compatible.
HSBC is thought to be interested mainly in Charterhouse's private-equity business. Charterhouse could be worth as much as $400 million, the Financial Times has reported.
- Bloomberg News
