Brainard warns of segmentation of liquidity
Changes in liquidity practices may heighten risk of ‘asset fire-sales’, Fed board member says
Recent changes in financial market liquidity conditions may cause "gapping" problems "in stressed conditions", Lael Brainard, a member of the Federal Reserve's board of governors, said on March 7.
Regulators in the US and at the Financial Stability Board (FSB) were monitoring possible developments, Brainard said. Focusing on the US outlook, she also noted there were some reasons to expect inflation might move towards 2%, while cautioning of considerable "downside" risks to this forecast.
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