Powell hints at $1 trillion goal for Fed balance sheet
Proposed reserves buffer is more than enough, Charles Goodhart says
Federal Reserve chairman Jerome Powell told US lawmakers on February 26 that roughly $1 trillion in reserves could be left on the Fed’s balance sheet once it stops its quantitative easing winddown.
The $1 trillion figure, plus a buffer, is “a reasonable starting point, an estimate, of where [the Fed] might end up”, Powell said in testimony before Congress.
He said the estimated amount of reserves banks need to keep at the Fed has gone up “substantially” due to changing regulatory requirements
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