Friday, February 26, 2010

Politi: Treasury's $200bn debt plan

"...By bolstering its Supplementary Financing Programme, the Treasury would help the Fed remove $200bn in reserves from the financial system. Some economists said that this would help bring the Fed’s main interest rate closer to the upper end of its current 0-0.25 per cent target...However, the move was described as a “purely technical adjustment in liquidity” by Joseph Abate of Barclays ­Capital. He said: “The $200bn worth of reserves drained ... is unlikely to have a noticeable effect on the effective funds rate, which remains locked under 15 basis points...”"

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