4 ms·

I haven't seen any reporting on how the recent and huge amounts of QE might factor into all of this. In my primate mind, wouldn't ongoing QE curb the impact of

I haven't seen any reporting on how the recent and huge amounts of QE might factor into all of this. In my primate mind, wouldn't ongoing QE curb the impact of rising interest rates on inflation?

datalopers 4y ago
QE was ended in March, and we're in full QT now.
- barelysapient 4y ago
  Ended; but there's still about $8T on the books of past QE right? https://www.businessinsider.com/personal-finance/quantitative-easing https://www.businessinsider.com/personal-finance/quantitativ...
  - JumpCrisscross 4y ago
    > there's still about $8T on the books of past QE right? Yes, about $8.8tn [1]. The Fed is running them off at about $60n a month [2]. (The Fed's optimal balance sheet is estimated to be around $4tn [3].) The elephant in the room is the Fed's mortgages [4][5]. Those will have to start being sold soon, since rising rates mean mortgagers aren't refinancing and thus a run-off strategy doesn't reduce holdings. [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... [2] https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504b.htm https://www.federalreserve.gov/newsevents/pressreleases/mone... [3] https://advisors.vanguard.com/insights/article/thefedsplantoshrinkitsbalancesheetquickly https://advisors.vanguard.com/insights/article/thefedsplanto... [4] https://www.ft.com/content/1a2e829e-de82-4083-abcb-ceeb46a456c4 https://www.ft.com/content/1a2e829e-de82-4083-abcb-ceeb46a45... [5] https://fred.stlouisfed.org/series/WSHOMCB https://fred.stlouisfed.org/series/WSHOMCB
    - bombcar 4y ago
      The sparks will really fly when they begin to require FNMA and FHLMC conforming loans be assumable.
tarunkotia 4y ago
I guess you meant QT and not QE.
nonameiguess 4y ago
Given your other comment, when you say "ongoing," what you mean is some of the assets they purchased remain on the Fed's books. If they don't continue buying, the fact that they still hold some of it doesn't have any further impact on rates on debt being offered in the future. They're doing more selling than buying at this point, which drives rates up. You don't need to dump everything at once to change the direction of movement. Think of like the strategic oil reserves. Selling any of it drives prices down. You don't need to sell literally all of it.

I haven't seen any reporting on how the recent and huge amounts of QE might factor into all of this. In my primate mind, wouldn't ongoing QE curb the impact of rising interest rates on inflation?

datalopers 4y ago

QE was ended in March, and we're in full QT now.

barelysapient 4y ago
Ended; but there's still about $8T on the books of past QE right? https://www.businessinsider.com/personal-finance/quantitative-easing https://www.businessinsider.com/personal-finance/quantitativ...
- JumpCrisscross 4y ago
  > there's still about $8T on the books of past QE right? Yes, about $8.8tn [1]. The Fed is running them off at about $60n a month [2]. (The Fed's optimal balance sheet is estimated to be around $4tn [3].) The elephant in the room is the Fed's mortgages [4][5]. Those will have to start being sold soon, since rising rates mean mortgagers aren't refinancing and thus a run-off strategy doesn't reduce holdings. [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... [2] https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504b.htm https://www.federalreserve.gov/newsevents/pressreleases/mone... [3] https://advisors.vanguard.com/insights/article/thefedsplantoshrinkitsbalancesheetquickly https://advisors.vanguard.com/insights/article/thefedsplanto... [4] https://www.ft.com/content/1a2e829e-de82-4083-abcb-ceeb46a456c4 https://www.ft.com/content/1a2e829e-de82-4083-abcb-ceeb46a45... [5] https://fred.stlouisfed.org/series/WSHOMCB https://fred.stlouisfed.org/series/WSHOMCB
  - bombcar 4y ago
    The sparks will really fly when they begin to require FNMA and FHLMC conforming loans be assumable.

tarunkotia 4y ago

I guess you meant QT and not QE.

nonameiguess 4y ago

Given your other comment, when you say "ongoing," what you mean is some of the assets they purchased remain on the Fed's books. If they don't continue buying, the fact that they still hold some of it doesn't have any further impact on rates on debt being offered in the future. They're doing more selling than buying at this point, which drives rates up. You don't need to dump everything at once to change the direction of movement. Think of like the strategic oil reserves. Selling any of it drives prices down. You don't need to sell literally all of it.