Bullard and Quarles

Bullard

  • Fed doesn't want two policy tools at cross-purposes
  • Don't shrink balance sheet and cut rates at the same time
  • Balance sheet movements in theory would not send signals that conflict with path of interest rates, but suggests the reality might be different
  • visual energy policy would include enough currency reserves to satiate the economy, supports treasury only holdings

Quarles:

  • Was a little surprised and puzzled by reaction to December announcement on Fed B/S
  • In favor of all treasury B/S, He is open minded of duration.
  • all else being equal he thinks fit balance sheet should move to shorter maturities
  • does not know how to define a neutral balance sheet