CANADA PM CARNEY CANCELS PROPOSED CAPITAL GAINS TAX INCREASE

MNI BRIEF: FAIT Didn't Affect Fed's Covid Decisions - Williams

MNI: Fed Waller Prefers Faster QT Path, Wants Contingency Plan

MNI BRIEF: PBOC To Enhance Easing On External Uncertainties

MNI China Daily Summary: Friday, March 21

MNI China Press Digest March 21: Land Sales, Services, PBOC

EZ/UK T-Bill Calendar: Germany, France Auction On Monday

EZ/UK Bond Supply Calendar: EU-Bond Auction on Monday

MNI: BAKER HUGHES US RIG COUNT 593; OIL RIGS 486; GAS RIGS 102

GERMANY: Handelsblatt Report on Lingering Uncertainties Ahead of Bundestag

GERMANY: Union/SPD Migration Alignment After Turmoil Threatened Debt Deal (BILD)

GERMANY: Official Interim Election Results Tilt Towards Missing BSW & FDP

© 1982-2025 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

FOMC Not Considering Changing Pace of Balance Sheet Runoff

FED
  • Q: You said you need "slower" growth, you used to say "below potential" growth, has that changed? Are you saying all meetings are live, is each meeting going to be a subjective judgment?
    • A: The Dot Plot is a picture in time - when things change, the forecast could change. The efficacy of the Dot Plot probably decays in the 3 month period between meetings. We personally update the forecast but we don't formally update the Dot Plot.
    • Potential growth has been elevated for a year or two over its trend level. People think trend is around 2%. But we've had an improvement in the size of the labor force, with potential growth rising in a catch-up growth. That means you could still be growing 2% this year and still be growing below the increase in the potential output of the economy - that's why I say it is below potential.
    • We're going meeting by meeting, we're asking ourselves whether policy is sufficiently restrictive.
  • Q: Have you considered changing QT program in light of higher long-end yields?
    • A: The FOMC is not considering changing the pace of balance sheet runoff. I know there are many possible explanations for why rates have been going up, and QT is certainly on that list, it may be playing a small role. At $3.3T, hard to make a case that reserves are even close to scarce.
  • Q: Could you expect finalizing the Basel 3 endgame capital proposal without significant changes?
    • A: We are a consensus driven organization, we will come to a package that has broad support on the board.
Energy BulletsCommodities
Energy BulletsCommodities

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.