Fed’s QT reaches maximum as critics warn of stability risks
Former RBI governor Rajan and co-authors argue QT may pose risks for financial stability
The Federal Reserve’s quantitative tightening (QT) programme will reach its maximum monthly level in in September of $95 billion dollars’ worth of securities matured.
Several leading economists, including Raghuram Rajan, presented a paper at the Fed’s Jackson Hole conference arguing quantitative tightening may create liquidity problems if mishandled.
Quantitative tightening is the reduction in the Fed’s balance sheet by letting securities mature without purchasing new ones. The Fed bought
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