"...In written remarks he indicated that the central bank would tighten monetary policy in this cycle after ramping up tools, such as "reverse repos" and a "term deposit facility", designed to shrink the Fed's balance sheet, which increased from $800bn (€589bn, £519bn) to more than $2,000bn during the crisis.
Today Mr Bernanke may also have to explain the Treasury department's announcement yesterday that it intends to revive a programme through which it helps fund the Fed by depositing cash at the central bank.
The $200bn plan - which also would have the effect of reducing excess reserves - is seen by some economists as another helpful manoeuvre ahead of monetary tightening."
Wednesday, February 24, 2010
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