"They're going to be very careful. They attempted to do this in a stealth way, in my humble opinion, for political expediency," Shallet said. "I think that to start acknowledging that ... we're going to have to suspend the balance sheet expansion by the middle of the year, markets are not going to take that well."
"This is tricky terrain for Powell and if mishandled could be disruptive," Guha wrote. "That is why we expect only very cautious and limited comments for now, in particular given virus concerns, but see net downside risk on the day."There's also some expectation that the Fed could approve a rate hike, but not the kind that most people generally notice.
The reason is that the Fed uses the IOER as a guardrail for its benchmark funds rate. Over the past two years, the Fed has been cutting the IOER rate as the funds rate has moved to the top of its target band.
GeorgeSelgin DavidBeckworth Fed looking to hike IOR/IOER rate to get it more in line with mid range of FF rate. Or they could adopt a corridor system no? :)
😷😷😷😷😷
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