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MNI INTERVIEW: Fed's Mester Focused on QT Impact on Liquidity

(MNI) WASHINGTON

Cleveland Fed president also urges the Fed to sell MBS to hasten the transition to a primarily Treasury portfolio.

Federal Reserve Bank of Cleveland President Loretta Mester told MNI Wednesday she's more concerned about the potential for quantitative tightening to constrain market liquidity than its effect on financial conditions, and she favors letting the USD95 billion-a-month asset run-off program continue on autopilot.

"I'm more focused on whether it's going to have an impact on liquidity in the markets than I am on how much the equivalent is on a fed funds rate," she said in an MNI webcast. "We're monitoring to make sure it's not disrupting anything. So far, so good."

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Federal Reserve Bank of Cleveland President Loretta Mester told MNI Wednesday she's more concerned about the potential for quantitative tightening to constrain market liquidity than its effect on financial conditions, and she favors letting the USD95 billion-a-month asset run-off program continue on autopilot.

"I'm more focused on whether it's going to have an impact on liquidity in the markets than I am on how much the equivalent is on a fed funds rate," she said in an MNI webcast. "We're monitoring to make sure it's not disrupting anything. So far, so good."

Keep reading...Show less