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Fed’s Logan: Eventual treasury purchases likely to be larger than before financial crisis – RTRS

Fed’s Logan speech titled "Observations on Implementing Monetary Policy in an Ample-Reserves Regime"  can be read here in full: 

 Full Speech

Thank you for the kind introduction. While preparing these remarks, I learned that the Money Marketeers organization was founded by Dr. Marcus Nadler, a gifted educator who challenged market participants to deepen their understanding of the forces that move markets, and that it was born out of a popular lecture series he regularly held at NYU.

This spirit of continual learning is a core value at the Federal Reserve, and that has been particularly important in recent years as the Fed has been operating in a new monetary policy implementation regime.

  • NY Fed will study money markets to see how they operate with lower level of bank reserves in the system.
  • Ample reserves' policy to keep rates stable if fed needs to supply liquidity, buy assets to support economy.
  • Bank borrowing rates above interest on excess reserves does not mean reserves are not well supplied.
  • U.S. bank reserves are ample, above system's demands.
  • Fed will eventually need to buy treasuries to offset decline in reserves NY fed might have to respond to unanticipated changes in reserves by conducting repo operations.

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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