Yellen stresses lighter rules for small US banks

FEDERAL Reserve chair Janet Yellen said yesterday that the US organisation would try to “tailor” its regulatory approach to smaller banks, adding that work on larger banks is still “not finished”.

Speaking to a summit of American community banks, Yellen stressed that the Fed was trying not to place “undue burdens” on the country’s many small financial institutions.

She added that the Fed was still concerned about the largest banks’ reliance on volatile short-term funding, but that very few community banks were similarly dependent on these potentially risky funding avenues.

There was also positive news on the US manufacturing sector released yesterday. The Institute for Supply Management’s purchasing managers’ index (PMI) rose to 54.9, a better improvement than expected.

However, Markit’s PMI reading for the same sector later fell slightly to 55.4, below expectations. In both indexes, a reading above 50 indicates that the sector is expanding.

Further figures on the number of new claimants for unemployment benefits in the US rose yesterday, with 344,000 fresh applicants in the week to 26 April. In the previous week, 330,000 people applied.