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Powell Will Reveal More Information on Asset Holdings at Appropriate Time

FED

Q: The principles statement calls for "significantly" reducing asset holdings, what does that mean? Apart from moving sooner/faster to shrink holdings, are there other ways you and FOMC are thinking about recalibrating? And how much disagreement is there, incl on active sales rather than passive runoff, changes in composition of reinvestment?

  • A: "I'm afraid to tell you that those are all great questions and they are questions that the committee is just turning to now". "I expect that this process will be something that we spend time on in coming meetings. I can't tell you how many. I can't tell how long it will take."
  • "At the appropriate time, we'll provide additional information." "At the next meeting we'll be turning to more of the details that you're asking about."
  • The balance sheet is much bigger w shorter duration than the last time...leads you to being willing to move sooner than we did the last time and also perhaps faster. But beyond that it's not appropriate for me to speculate exactly what that would be. Principle number on is that the Funds rate is the primary means of adjusting monetary policy.
  • We think of the balance sheet as moving in a predictable manner, in the background, the active tool is the Funds rate. Also an element of uncertainty around the balance sheet, we have a much better sense of how rate increases affect financial conditions. We'll arrive at a timing and a pace and composition, announce with advance notice, it will start in the background and we'll have rates be the active tool.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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