Understanding the Fed’s proposed reserves tool
FOMC hinted at tool for cutting reserves demand at last meeting – the question is, why?
In the Federal Open Market Committee’s most recent minutes, the central bank added a short sentence noting that some participants wished to discuss some new tools designed to support the Fed’s long-term balance sheet plans.
“At future meetings, the committee should discuss the potential benefits and costs of tools that might reduce reserve demand or support interest rate control,” the minutes stated.
While the Fed has not given any clear statement about the objectives or the substance of the
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