Fed's Williams: US economy has not yet achieved ‘substantial further progress’

The US economy has not achieved the 'substantial further progress' set by the US Federal Reserve to start reducing asset purchases, New York Federal Reserve President John Williams said on Monday, as reported by Reuters.

Additional takeaways

"Purchases of treasury and mortgage-backed securities both affect interest rates and overall financial conditions."

"I don't view one set of asset purchases as more focused on housing."

"US home prices have increased very strongly and equity prices are at high levels but I'm not worried about financial stability risks."

"Price spikes in certain categories are related to the reopening of the economy, important to watch inflation data carefully."

"One of the advantages of the Fed’s framework is that it will help them anchor inflation expectations without having to resort to negative rates."

"Standing repo facility would provide insurance if there is an unanticipated shock to supply or demand in short-term funding markets, similar to sept. 2019 or March 2020."

"Standing repo facility would help to keep the fed funds rate within the target range."

"Establishing a standing repo facility would not be a move away from ample reserves regime."

Market reaction

These remarks were largely ignored by market participants and the US Dollar Index was last seen gaining 0.17% on a daily basis at 92.26.