By Michael S. Derby
New York (Reuters) – More than two days of testimonies this week before the Congress, the president of the Federal Reserve, Jerome Powell Commonly called quantitative tightening.
“I think we have ways to travel” to reduce the size of central bank obligations and there are no signs that market liquidity has decreased enough to affect the reduction of the Fed of the assets of the assets of the assets of Treasury and mortgage obligations, Powell told a house panel on Wednesday Wednesday.
Powell’s observations on quantitative tightening, or QT, occur while the Fed has lost just over 2 dollars of its assets. The Fed seeks to extinguish the liquidity it added to the markets during the COVVI-19 pandemic, when it bought billions of bonds to stabilize markets and economic growth of the goose by reducing the costs of borrowing in the longer term.
Since the start of the Fed, he has been trying to reduce the overall liquidity of the market, most clearly measured in terms of banking reserves, at levels that allow normal levels of volatility of market interest rates, while allowing control From the Fed company on federal funds, its main tool to influence the momentum of the economy.
The Fed also tries to avoid a replay of the events of September 2019 when, during its last QT chapter, too much liquidity was removed from the system, forcing the Fed to start adding it aggressively.
The Fed has taken a certain number of measures to prevent this from happening, as slowing down the pace of its withdrawal and setting up new liquidity facilities, while providing more advice on the factors it looks at. But he had a hard time providing a lot of advice on the moment when it can stop QT, except to say that this day does not seem imminent.
In recent days, some banks have pushed their END END estimates from the most recent consensus, which has watched a stop date in June.
“Recent communication suggests that the Fed is content to allow QT to continue working despite the small visibility potential in the request for reserve in the coming months due to the dynamics of the debt limit,” said Friday Goldman Sachs economists in a report.
Banque forecasters said that even if they expected the Fed to end the withdrawal at the end of the second quarter, they now see this happening at the end of the third quarter, the leap of the treasury stopping at The end of the second trimester and the mortgage returned with the third quarter.
Morgan Stanley economists also kicked the CAN Down the road.
