This archive report was first published on 30 September 2019.
Published on September 30, 2019, New York Fed Chief John Williams is facing his biggest test as the central bank navigates a complex economic landscape.
Williams emphasized the importance of maintaining a sufficient supply of reserves, which are essentially currency deposits at the Fed. He noted that the recent episode showed him that the approach might require higher reserves than he had realized, which could hint at the Fed growing its balance sheet again soon.
Williams, who has a constant vote on monetary policy decisions made by the Federal Open Market Committee, declined to give any hint about his preferences on rate cuts beyond the two moves already made. He argued that amid uncertainty, the Fed should keep its options open.
When asked about the decision-making process behind the Fed's intervention in overnight repurchase agreements, Williams explained that the timing was influenced by the delayed release of the federal fund rate data. He noted that the Fed took market participant feedback into account and announced its plans in advance to provide liquidity to markets.
