User Login

img
17 Dec

Fed oppressively inclines up new policy tool to poke rates higher:

admin Comments (1)
Federal Reserve anticipated about $2 trillion in offer for a facility to help swab up excess cash in financial markets after years of stimulus.A new policy tool helps Fed to raise U.S interest rates from near zero.
 
The U.S. central bank, which raised rates modestly on Wednesday as expected, said there would effectively be no limit on a so-called overnight reverse repurchase programme (ON RRP) that is now capped at $300 billion.
 
The tool would be "limited only by the value of Treasury securities held outright," the New York Fed said in a statement. The Fed held some $2.5 trillion in Treasury bonds last week in its portfolio of nearly $4.5 trillion total.
 
Analysts had expected the Fed to only double the size of the repo programme to around $600 billion. But policymakers have repeated they wanted to prove they could still control short-term markets.
 
"It's effectively un-capped because they are willing to reverse repo out all the securities they have available."
 
The decision suggests Fed policymakers are doing all they can to ensure that rates, which have been at rock bottom for seven years, will actually rise on Thursday despite some $2.6 trillion in excess bank reserves flooding financial markets and making the job far more difficult than in the past.
 
The nightmare scenario would be that short-term borrowing costs do not rise enough due to years of Fed bond-buying meant to stimulate the choppy U.S. economic recovery.
 
Beginning Thursday, the reverse repo rate will be set at 0.25 percent, from 0.05 percent now, and serve as the "floor" to the new target policy range of 0.25-0.50 percent. A rate the Fed pays primary dealers on excess reserves will serve as the "ceiling" at 0.5 percent.
 
The reverse repo programme has been tested for more than two years but has not yet been relied upon for a policy change. It will be available to some 160 money market funds, banks, and government-sponsored entities that can earn 0.25-percent interest from the Fed for parking cash there overnight.
 
The cap on individual bidders remained at $30 billion.
 
The New York Fed, which conducts U.S. monetary policy three blocks off Wall Street, said it "anticipates that around $2 trillion of Treasury securities will be available for ON RRP operations."
 
"In the highly unlikely event" that bids surpass that level, it will run auctions to fill demand until all Treasuries are expired. Bids at the limit "stop-out rate" would be filled on a pro rata basis, the New York Fed said.
 
The Fed's first tightening in more than nine years represents a big step on the tricky path of returning monetary policy to a more normal footing after the deep 2007-2009 recession and financial crisis.
 
The unprecedented easing has eclipsed the effectiveness of the federal funds market as the central bank's primary policy lever.
 
A smooth liftoff will be up to a team of traders in the New York Fed's "operations room," who on Thursday morning will closely monitor key short-term rates to determine whether markets are cooperating.They will run the repo auction between with the dozens of firms that do not usually do direct business with the Fed.
 
The Fed can also turn to term repo and deposit facilities as needed to lift market rates.
 
0 0 0
 

Comments

  • google.net - Dec 20,2015

    Moreover, as the loans will be processed via online providers, it is certain that they are busy Before yyou gget ones Geneva to Courmayeur shift to ggo away and create a cable automobile up a number of real mountain tops, climb this particular one tto see this specific beautiful church that is located on a web site that has been entertained since the Independence day century

    Reply
 

Leave a Comment

 

Categories

Popular

OPEC-Geocivics strain boosts Oil post
Nov 26 , 2015

Focus on global adversity is back as crude drops,Yen rises:
Feb 03 , 2016

Gold dips 2 percent as dollar strengthens:
Feb 23 , 2016

Recent

Euro near to three weeks high
Dec 08 , 2016

Crude falls down as Russian output increases
Dec 06 , 2016

Euro tumbles down as Italian leader fails referendum vote
Dec 05 , 2016

Tags

opec oil prices wti brent oil forex signal trading signals currency pair manual automated trading monetary policy committee pound dropped sterling tumbles mark garney new member interest rates central banks monetary policy bond market borrowing costs credit cycle recession unemployment rate economy job market slow gdp interest rate central bank u.s economy treasuries fed rate hike green back traders federal reserve reverse repurchase programme repo programme stimulus debt purchase dovish statement quantitative easing us dollar warrants oil price economic slowdown global benchmark overproduction china yen economic data hedge funds speculators gold imf upgraded price forecast yuan economic growth global growth euro area slowdown lending rate financial events bank of japan benchmark commercial banks renminbi currencies boj pboc government bond dollar employment trade spdr cftc gdp financial markets banks oil stockpiles risky assets money markets abe jpy us bankers canada oecd investment liberal government analysts al naimi barrel crude bank governor euro ecb euro zone inventory brent wall street financial proposal australian aussie draghi monetary stimulus eu fed fomc negative rates reserve funds u.s policymakers brexit sterling pound smith futures inventories evans policy makers data yellen europe negative bank bankruptcies crude futures asia rate japanese policy meeting european union deficit greece merkel germany g-20 downgrade saudi iran qatar japan economic ounce fx currency nikkei dudley securities libya etf payrolls policy greenback tokyo uk strategists federal g7 britain market survey economists middle east bullion kiwi new zealand rbnz rates $ job voting snb swiss franc u.k matsui goldman term nigeria bpd australia reserve bank election vote decisions boe asian shares week ship cents qe money monetary rba monetary policies production investors bailout fx news resources taper chinese government asset theresa may may president price bonds report cpi clinton trump december hike england political presidential fbi pounds donald trump bond yields energy minister yield reserve month italy european percent

Archives

Contact Us

Newsletter

Connect With Us

Copyright © 2014 TradeFxP Ltd. All Rights Reserved.