I think the Fed has good info into US dollar markets, and less insight into its various derivatives around the world. But even with "good info" they have still proven to make big mistakes, like significantly underestimating the required reserves of the banking sector in previous round of QT.
I think the Fed has good info into US dollar markets, and less insight into its various derivatives around the world. But even with "good info" they have still proven to make big mistakes, like significantly underestimating the required reserves of the banking sector in previous round of QT.
To your last question - the simple answer it that the Fed can adjust the RRP however it wants, whenever it wants, to meet its goal. However, the Fed can just as easily re-start QE and lower rates tomorrow if it wanted to as well. Lowering the RRP award rate would have the same effect as lowering the FFR. They COULD do this tomorrow, but its the opposite of what they want to do from a policy perspetive.
IMO, it is more likely that such a pivot would be in response to a "crisis" rather than to prevent one.
Hello Mr. Cat!
I think the Fed has good info into US dollar markets, and less insight into its various derivatives around the world. But even with "good info" they have still proven to make big mistakes, like significantly underestimating the required reserves of the banking sector in previous round of QT.
To your last question - the simple answer it that the Fed can adjust the RRP however it wants, whenever it wants, to meet its goal. However, the Fed can just as easily re-start QE and lower rates tomorrow if it wanted to as well. Lowering the RRP award rate would have the same effect as lowering the FFR. They COULD do this tomorrow, but its the opposite of what they want to do from a policy perspetive.
IMO, it is more likely that such a pivot would be in response to a "crisis" rather than to prevent one.