By Francesco Canepa and Balazs Koranyi

FRANKFURT (Reuters) – There is reluctance among European Central Bank policymakers to follow the U.S. Federal Reserve’s move to target an average inflation rate, fearing this could tie their hands, sources involved in a revamp of ECB policy told Reuters.

The four central bank sources, including members of both the hawkish and dovish wings of the ECB’s policymaking governing council, also expressed doubts about whether orthodox inflation theory still applied in economies where prices have long stagnated despite interest rates close to or below zero.

After missing its goal of keeping inflation “below but close to 2%” for a decade, the ECB is reviewing its strategy in the wake of a similar review by the Fed and just as a pandemic-induced recession is pushing euro zone inflation into negative territory.

The euro zone’s central bank has been expected to follow the Fed, which said in August it would aim for 2% average inflation over an unspecified period, so that periods when prices grow too slowly need to be compensated by times of faster increases – and vice versa.

But the policymakers who spoke to Reuters feared that going down this route risked encouraging financial markets to jump to the wrong conclusions about future policy decisions based simply on where the average happened to be at a given point in time.

Instead, they wanted to retain the flexibility to judge each situation on its own merits, for instance by playing down the significance of temporary changes in inflation due to swings in the price of oil.

“We want flexibility so an average target would not really give us a benefit,” one of the sources said.

An ECB spokesman declined to comment.

With euro zone inflation averaging 1.3% over the past decade and currently negative, they

Most banks have steered clear of the Federal Reserve’s loan program designed to buoy midsize businesses. One Florida lender is diving in.

Miami-based City National Bank of Florida has embraced the Fed’s Main Street Lending Program, which made its first loan this summer. Of the 252 loans issued through the program in its first three months, City National made nearly 100 of them, extending loans of up to $50 million to companies in states as far away as California and Wyoming.

But otherwise the program, which lets banks make loans to businesses and then sell most of the loan to the Fed, has received a lukewarm reception at best. Fewer than 100 banks have used it, as of the end of September, issuing about $2 billion of loans in a $600 billion program. More than $500 million of that was through City National. None of the nation’s largest banks have made one of the loans.

City National, a subsidiary of Chilean bank Banco de Crédito e Inversiones, said it is confident in its lending. “We’re in the risk management business,” City National Chief Executive Jorge Gonzalez said in an interview. The program’s terms, he said, seem more than reasonable, and the bank has made the loans largely to existing customers.

Using the Main Street program leaves a bank with less additional debt on its books and free to make more loans to other borrowers. Banks also earn fees from borrowers for making the loans.

City National made an early decision to sign up for the program, translating the Fed’s lengthy details into easy guides for customers. Loan officers at the 30-branch bank talked to Fed staffers frequently over the summer.

Miami-based City National Bank of Florida issued

(Reuters) – The U.S. Federal Reserve’s new framework for managing monetary policy shows a “tolerance” for higher inflation, but not necessarily a full-blown promise to engineer it, Kansas City Federal Reserve president Esther George said Thursday.

The Fed last month, as part of applying a new strategy to let inflation run higher in hopes of encouraging further job gains in a “hot” economy, said it would not raise rates until inflation has both reached its 2% target and is on track to “moderately exceed 2% for some time.”

“I interpret the revised consensus statement as a tolerance – and less as a promise to engineer,” higher inflation, George said, adding her voice to the disparate views among Fed officials about how the new framework will be applied in practice.

Minutes of that September meeting released on Wednesday showed a broad divergence of views on that front, and George, traditionally among the less tolerant of inflation and the financial risks loose monetary policy might generate, has placed herself in the camp that sees the new framework as less binding rather than more.

The new language in the Fed statement is “a message of patience” that the central bank will not react too fast to preempt inflation as it develops, George said. Indeed many analysts feel the Fed’s target interest rate will remain near zero for years to come.

However “it is not yet clear how much patience will be required,” George said, given that the pandemic may raise inflation more quickly than expected due to supply constraints, and particularly if a vaccine unleashes pent-up consumer demand.

“It will be difficult to assess the underlying pace of inflation until the dust settles,” George sad in webcast remarks to the Kansas Economic Outlook Conference at Wichita State University.

George also said she felt

A Florida rapper allegedly pocketed more than $1 million in COVID-19 relief funds, which he used to buy a Ferrari and other luxe items, federal prosecutors said.

Diamond Blue Smith — who is a member of the group Pretty Ricky — was charged this week for his role in a $17 million coronavirus relief scheme, according to the US Attorney’s Office for the Southern District of Florida.

Prosecutors allege that Smith — who also appears on the show “Love & Hip Hop: Miami” — obtained $427,000 through his company, Throwbackjersey.com, by falsifying documents for a Paycheck Protection Program (PPP) loan.

The PPP program was meant to help struggling small businesses during the coronavirus pandemic.

LOAN FORGIVENESS UNDERWAY FOR SBA’S PAYCHECK PROTECTION PROGRAM

The recording artist also was able to secure another PPP loan of $708,00 through another company, Blue Star Records, prosecutors said.

He then allegedly used the loan proceeds to buy a $96,000 Ferrari as well as $2,290 in goods from Versace.

On another occasion, he spent more than $27,176 at the Seminole Hard Rock Hotel and Casino, prosecutors said.

The FBI also accused Smith in a complaint of fraudulently seeking PPP loans on the behalf of others in order to get kickbacks.

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At least a dozen other people are charged in the scheme, which secured at least $17.4 million in relief funds, prosecutors said.

Smith’s Ferrari — it was not immediately clear which model — was seized when he was arrested Monday on charges of wire fraud, bank fraud, and conspiracy to commit wire fraud and

“The expansion is still far from complete,” Powell said in a speech to the National Association for Business Economics, a group of corporate and academic economists. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth.”

Powell noted that the economic recovery has slowed in recent months compared with its rapid improvement in May and June. Incomes fell in August. And job growth weakened in September, slowing to just 661,000, less than half the gains of 1.5 million in August and 1.8 million in September. The economy has recovered only slightly more than half the 22 million jobs that were lost in March and April.

“A prolonged slowing in the pace of improvement over time could trigger typical recessionary dynamics, as weakness feeds on weakness,” he said.

During a question-and-answer session with economists, Powell noted that the pandemic recession has disproportionately harmed in-person service industries, especially restaurants, bars, hotels, travel companies, movie theaters and other entertainment venues. The heavy damage to those industries has left millions of people unemployed, likely for an extended period, until they are either finally recalled to their previous jobs or switch to new careers.

“The right thing to do and the smart thing to do in the long run is to support those people as they return to their old jobs or find new jobs,” the chairman said.

In recent months, in speeches and in testimony to Congress, Powell has repeatedly urged lawmakers to enact an additional economic aid package. Fed chairs typically avoid inserting themselves into policy debates, but Powell has stressed that the Fed can only lend money to help spur growth.

Actual spending — further