Chris Waller tells us why and pushes back on Powell's reasoning
I find it interesting that the Federal Reserve just released a statement from Chris Waller, the dissenting Governor on the decision to reduce Treasury QT.
He said “Reducing the Federal Reserve’s balance sheet is an important part of normalizing monetary policy implementation and reducing the unneeded reserves in the banking system. Slowing further or stopping redemptions of securities holdings will be appropriate as we get closer to an ample level of reserves. But in my view we are not there yet because reserve balances stand at over $3 trillion and this level is abundant.” I bolded for emphasis.
Also, and where I believe Powell fudged his answer as to why they did cut Treasury QT, Waller said “There is no evidence from money market indicators or my outreach conversations that the banking system is getting close to an ample level of reserves.”
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