MNI BRIEF: Fed's QT Could Go On For Another Two Years- Mester

The Federal Reserve's quantitative tightening could continue for another two years, Cleveland Fed President Loretta Mester said Friday.

"We have a dashboard of indicators that we're going to be looking at that we monitor to make sure that we're not going to go a little bit over but there's still more runway there," she said in Q&A after a speech at the Manhattan Institute. "We still have a very large balance sheet so that can continue running over the next year-and-a-half, two years."

Mester's comments paralleled those from Dallas Fed President Lorie Logan who has said QT can continue independent of moves in the fed funds rate. (See: MNI INTERVIEW: Reserve Scarcity Yet To Materialize - Fed Econ)

The New York Fed's manager of the System Open Market Account Roberto Perli has said he is looking at a variety of indicators to determine how much longer QT can continue, including spreads on money market rates and distributions and changes in reserve balances. The Fed is allowing just under USD100 billion per month in Treasury and mortgage bonds it owns to mature and not be replaced, a process that has reduced central bank holdings by over USD1 trillion since peaking in April last year.