By Sheila Mullan
NEW YORK (MNI) – Brian Sack, manager of the FOMC System Open
Market Account and a New York Federal Reserve Bank executive vice
president, said Wednesday night the Fed is “still studying” the
appropriate level of excess reserves.
Answering questions following a speech to the Money Marketeers,
Sack as asked how much the Fed would have to drain excess reserves to
get the effective Fed funds rate to trade at a narrower spread against
the interest on excess reserves.
“It’s very hard to answer the question,” Sack said, stressing there
was no urgent need to address that right now. “This is a case where we
don’t have data.”
Sack also noted that it is not clear how the QE2 affected inflation
expectations.
He would not comment directly on the Fed’s preparations in the even
the debt ceiling is not increase, saying Fed Chair Ben Bernanke
addressed that issue that last week.
–Tel: 212-669-6432, email: smullan@marketnews.com
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