FAST FIVE: The Fed Will Restart QE In November: This Is How It Will Do It

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To the disappointment of many, Powell did not do that, and instead, the FOMC realigned both interest on excess reserves (IOER) and the reverse repo (RRP) rate lower by 5bp, resulting in 30bp cuts to both rates.

Powell also noted during his press conference that the Fed would use temporary open market operations (OMOs) “for the foreseeable future” to address pressures in funding markets.

Said otherwise, the Fed may not have announcer QE4 yesterday, but it will likely announce it in the very near future.

It is possible that the FOMC will take that opportunity to also reach a final decision on possibly shortening the maturity composition of its purchases, which it discussed at its May meeting.” So what will the Fed's restart of QE POMO (some analysts, such as Morgan Stanley's Matt Hornbach are very sensitive not to call the return of POMO as QE even though both are effectively the monetization of US Treasurys and the US budget deficit) look like.

pardon the Fed's open market purchases of Treasurys, will return after a 5 years hiatus.

Categories: ZH