John Williams said-the US Treasury market is the foundation of financial stability
2022.11.16 12:52
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John Williams said-the US Treasury market is the foundation of financial stability
Budrigannews.com – New York Fed Board Member Williams said Tuesday that he believes monetary policy is not the best tool for addressing financial stability risks and that policymakers should take steps to increase the resilience of things like the U.S. Treasury market.
“For monetary policy to be most effective, financial markets must function properly,” Williams said in a statement ahead of a financial markets meeting at the New York Fed.
“The use of monetary policy to mitigate the vulnerability of financial stability can have a negative impact on the economy,” Williams said, adding that “monetary policy should not be as if it were the jack of all trades and not the master of all.”
In prepared remarks, Williams did not comment on the outlook for monetary policy in the near term.The head of the New York Fed is also the deputy chairman of the Federal Open Market Committee, which sets interest rates.
But Williams said that in the current chapter of high inflation, the world’s central banks are taking “firm measures” to reduce the price pressure down. “Restoring price stability is of paramount importance because it is the foundation of sustained economic and financial stability. Price stability is not an either/or, it’s a must-have,” he said.
The central bank said the Fed and the markets should work together to find solutions that improve market resilience.
He said in a separate statement that the government’s financial sector was considering increasing transparency in the bond market.Treasury securities have suffered from a drop in liquidity, as the Fed has aggressively raised interest rates to reduce inflation.Despite the difficult trading conditions, there is still a feeling that the market is still working.
To increase market visibility, the Ministry of Finance proposes to create public transaction data for the execution of Treasury securities, “end-of-day spreads and appropriate cash.””
Liang also said the government’s potential plan to buy back old bonds has been postponed for now.”We have not decided whether or how to implement the repurchase program, but we will continue to work on repurchases as part of future repayments,” he said.
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