Powell reconsiders QT path…"A situation in which reserve balances decline excessively should be avoided"
JH Kim
Summary
- Jerome Powell, Chair of the U.S. Federal Reserve, said the Fed's Quantitative Tightening (QT) program could end within several months.
- Powell said he is reconsidering the QT path due to recent increases in short-term money market rates.
- He warned that excessive reductions in reserve balances could threaten financial market stability.
On the 14th (local time), according to The Wall Street Journal (WSJ), Jerome Powell, Chair of the U.S. Federal Reserve (Fed), said the Fed's Quantitative Tightening (QT) program could end within several months.
Powell said, "Recent increases in short-term money market rates have led to a re-evaluation of the QT path," and "A situation in which reserve balances decline excessively should be avoided."
He also warned, "If Congress abolishes the interest on excess reserves (IOER) system, the Fed could lose effective control over short-term interest rates," expressing concern that "in that case, financial market stability could be threatened."
JH Kim
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