By Michael S. Derby <\/p>\n
JERSEY CITY, New Jersey, June 24 (Reuters) – A Federal Reserve Bank of New York official involved in implementing monetary policy cautioned on Wednesday against reading \u200ctoo much into language in last week’s Federal Open Market Committee meeting that addressed \u200chow the central bank manages its expansive balance sheet. <\/p>\n
The document, released on June 17 when the FOMC met for the \u200bfirst time under new Chairman Kevin Warsh, noted: “The Committee reaffirmed its policy of maintaining ample reserves in the banking system.” Warsh has been a deep skeptic of Fed asset-buying policies. <\/p>\n
Some analysts interpreted that addition as a signal that the Warsh-led Fed was offering a new sympathetic take on how the central bank \u200chas been managing liquidity. Over the \u2060course of this year, the Fed has been buying Treasury bills to ensure that money markets have enough cash to keep the Fed’s short-term rate target \u2060at the desired level. <\/p>\n
Speaking at Crane’s Money Fund Symposium in Jersey City, New Jersey, Dina Marchioni, director of money markets for the New York Fed, said of the FOMC statement: “I didn’t interpret it as having \u200breally \u200ba big change in what the direction was to \u200bthe Desk.” <\/p>\n
Regarding the new wording, Marchioni added, “You \u200ccould say this is clean-up language,” and officials still have “lots of flexibility” to tweak the pace of Treasury bill buying to deal with market liquidity conditions. New York Fed officials have already said the pace of so-called “reserve management buying” would react to market liquidity conditions. <\/p>\n
The Fed has been buying notable amounts of Treasury bills since last December as part of a technical exercise to manage \u200cmarket liquidity. That has caused the size of the Fed’s \u200bbalance sheet to rise, moving from $6.5 trillion in December \u200bto its current level of $6.7 trillion. <\/p>\n
The Fed \u200bhas moderated the pace of the buying from $40 billion per month to the \u200ccurrent rate of $10 billion per month, amid \u200bquestions about the future of \u200bthe effort. Warsh is a skeptic of using the Fed’s balance sheet as a policy tool and has launched an effort to consider the future of the program. <\/p>\n
Warsh wants \u200bthe Fed to have a smaller \u200cbalance sheet and believes that asset purchases that were aimed at calming markets and \u200baugmenting changes in interest rate policy have left the Fed holding too many bonds. <\/p>\n
(Reporting \u200bby Michael S. Derby; Editing by Edmund Klamann) <\/p>\n","protected":false},"excerpt":{"rendered":"By Michael S. Derby JERSEY CITY, New Jersey, June 24 (Reuters) – A Federal Reserve Bank of New…\n","protected":false},"author":3,"featured_media":890495,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5122],"tags":[5229,266435,1257,75842,361083,32521,75621,361082,401,405,403,130350,5226,5225,5228,5227,67,586,132,5230,68,2969],"class_list":["post-890494","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york","tag-america","tag-balance-sheet","tag-fed","tag-federal-reserve-bank-of-new-york","tag-fomc-statement","tag-jersey-city","tag-kevin-warsh","tag-market-liquidity","tag-new-jersey","tag-new-york","tag-new-york-city","tag-new-york-fed","tag-newyork","tag-newyorkcity","tag-ny","tag-nyc","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-usa"],"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/890494","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=890494"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/890494\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/890495"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=890494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=890494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=890494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}