Federal Reserve Bank of Dallas President Richard Fisher and Philadelphia’s Charles Plosser dissented last month against the extension of the Fed’s new fixed-rate reverse repurchase program, objecting to the absence of limits on the amount of money counterparties can post.
The Federal Reserve will make greater use of its reverse-repurchase agreement facility while policy makers shift focus to rate guidance from asset purchases, according to the central bank’s former markets group head.
Federal Reserve policy makers extended for a year tests of an overnight fixed-rate reverse repurchase program that could serve as an additional tool for the Fed when it eventually seeks to raise interest rates.
Simon Potter, the Federal Reserve Bank of New York’s markets group chief, said the Fed’s new reverse repurchase agreement tool probably will be a key part of how the central bank eventually tightens monetary policy.
Simon Potter, the Federal Reserve Bank of New York’s markets group chief, said the central bank’s purchases of government and housing debt under its third round of quantitative easing aren’t causing market disruptions.
Investors should be able to update their expectations for monetary policy more frequently now that the Federal Open Market Committee has linked its asset purchases to economic conditions, said Simon Potter, executive vice president at the Federal Reserve Bank of New York.
Simon Potter, the Federal Reserve Bank of New York’s markets group chief, said the central bank’s third round of bond buying has had a “large effect” on mortgage bonds and has pushed down interest rates on home loans.