- Tweeter
republish
The Federal Reserve, the central bank of the United States, announces that it will buy every month for $ 60 billion of treasury bills. Does this mean that it is starting again with its policy of lowering long-term rates, a policy abandoned in 2014 but still practiced in Europe by the ECB? What the Fed has just announced is not a change in monetary policy. The US Central Bank wants instead to better control the "Fed funds" ie the rate at which it allows banks to lend liquidity in the very short term. This essential instrument of his policy was escaping him.
With our correspondent in Washington , Pierre-Yves Dugua
Honest is who thinks badly: the Fed does not recover, like the ECB, to buy long-term debt to lower long rates. It simply wants to have the necessary time to liquidate the banking market in the very short term. The US Central Bank admits, implicitly, to have underestimated the importance for banks of maintaining liquidity, because of the new rules supposed to reduce financial risks.
Since banks are more than usual clinging to their cash holdings, we have seen that at the end of the quarter, when many maturities fall, the traditional system of very short-term interbank lending can get out of hand.
Banks seeking cash for 24 hours have not found that at the price of 9% and not 2% as the Fed wanted.
By buying $ 60 billion in short-term treasury securities every month, the Fed thinks it will be able to flood cash into an interbank market, sometimes short.