Wall Street on High Alert for Year-End “Cash Crunch”, Federal Reserve May Hint at Resuming “Money Printing” this Week
BlockBeats News, December 9th. As the year-end approaches, Wall Street banks are on high alert, preparing to address the increasing pressure in the money markets. Analysts say this may prompt the Federal Reserve to consider taking action to rebuild liquidity buffers in this $12.6 trillion market.
Federal Reserve policymakers will hold a meeting this week, the first since the Fed stopped shrinking its balance sheet (the so-called quantitative tightening). There are currently signs that reserves in the banking system are no longer abundant.
The Fed has yet to resolve policy questions stemming from the reduction of its balance sheet, including the composition of its Treasury holdings. However, with funding costs remaining elevated, an increasing number of market participants believe policymakers should take more specific actions to alleviate the strain, such as resuming direct security purchases to supplement reserves.
They expect Federal Reserve Chair Powell to provide some clues on the next steps at the end of the monetary policy meeting on Thursday Beijing time. (Golden Ten)
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