MNI BRIEF: Fed's Logan Sees Alternatives to Slowing Run-Off
MNI (LONDON) - There are alternatives to achieving the same impact of slowing the drawdown of the Fed's balance sheet through various technical fixes, Dallas Fed President Lorie Logan said at a Bank of England research event. (see >MNI: Fed Shift To Less Long-Dated Bonds To Take Years-Logan)
In a Q and A session,Logan, asked about the slowdown in asset run-off referenced in the minutes of the Fed's January meeting, said that there was more than one way of achieving a similar outcome.
"The minutes describe the possibility of slowing ... the runoff" but as senior Fed adviser Annette Vissing-Jorgensen described at the same conference Monday, the one mechanism for doing that would be through temporary open market operations and "that could slow that decline in reserves as well," Logan said.
"Those are all technical mechanisms to achieve the overarching principle of continuing a slow, steady pace," of balance sheet reduction and "I think that's an important question to think about" but "the important point is that money market rates right now are well below IORB," she said.