10/31/2022 - The Fed Guy – Quantitative Buybacks

“A Treasury Secretary exercising the power of QE would mark a departure in how monetary policy is conducted. Monetary policy has always been in part determined by actions of the Treasury, who influences the shape of the yield curve by deciding the national debt’s maturity profile. However, a sizable buyback program would be a much more overt foray into monetary policy. It would functionally ease financial conditions at a time when the Fed struggling to contain inflation. The concern over Treasury market fragility is legitimate, but so is the perception of monetary policy independence. The option to goose the stock market at will may also be very tempting.”

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