Federal Reserve's Williams: Bond purchases expected to start soon

BlockBeats News, November 8, Federal Reserve's Williams stated on Friday that the Fed decided last week to stop reducing its bond holdings and may soon need to expand its balance sheet through bond purchases. Williams said: "The next step in our balance sheet strategy will be to assess when reserve levels move from currently slightly above ample to ample." He added that once this occurs, "it will be time to initiate a gradual asset purchase process."

Williams also stated: "Based on the recent persistent pressures in the repo market and other signs indicating that reserves are shifting from ample to slightly above ample, I expect we will soon reach an ample level of reserves." Some analysts expect the Fed may begin expanding its asset holdings through bond purchases in the first quarter of next year. Williams warned that it is difficult to pinpoint the exact timing. "I am closely monitoring various market indicators related to the federal funds market, repo market, and payments to help assess the state of reserve demand." He also cautioned that maintaining appropriate liquidity through bond purchases is not a stimulus measure. (Golden Ten Data)