tag:blogger.com,1999:blog-2499715909956774229.post1874072111475145735..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Can the Fed Control Overnight Rates?Stephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2499715909956774229.post-86953596288650875552019-05-02T17:36:48.575-07:002019-05-02T17:36:48.575-07:00"So you don't buy the argument that exces..."So you don't buy the argument that excess reserves are now useful as HQLA, and thus are more likely to hit the scarcity point earlier than expected?"<br /><br />I don't buy the argument that they're more useful than Treasuries.<br /><br />"The spikes are due to month-end window dressing, right? Seems harmless to me."<br /><br />Yes. We used to see those spikes, in the other direction, in the fed funds rate. That was what the Fed said - it's harmless. I'm not so sure. Typically central banks are offsetting things like this that have to do with the day of the week, time of the month, whether there's some big payment flow in interbank markets, etc. Seems to indicate that, in the US context, a floor system doesn't work to do that in all instances.<br /><br />Steve Williamsonhttps://www.blogger.com/profile/16629774961390533020noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-7439663342626416592019-05-02T11:59:05.142-07:002019-05-02T11:59:05.142-07:00Not sure if my earlier comment got eaten, but I...Not sure if my earlier comment got eaten, but I'm reposting it:<br /><br />"It cannot be the case that reserves are somehow becoming "scarce." There's still about $1.5 trillion in reserves outstanding, and even extreme floor-system enthusiasts don't seem to think that $1.5 trillion isn't a lot."<br /><br />So you don't buy the argument that excess reserves are now useful as HQLA, and thus are more likely to hit the scarcity point earlier than expected?<br /><br />"Those end-of-month spikes in repo rates shouldn't be happening."<br /><br />The spikes are due to month-end window dressing, right? Seems harmless to me.<br /><br />Wondering why we don't have those spikes up here in Canada. Here is CORRA, our secured overnight rate:<br /><br />https://www.bankofcanada.ca/rates/interest-rates/money-market-yields/JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.com