Latest / The Federal Reserve Podcast with Fexingo: Interest Rates, FOMC Meetings, and Monetary Policy
The Unwinding of the Fed Balance Sheet and Reserve Scarcity
Episode 125 of the Federal Reserve Podcast with Fexingo examines a quiet but consequential shift in monetary policy: the Fed's ongoing balance sheet reduction, or quantitative tightening, and its potential to create reserve scarcity in the banking system. With the effective federal funds rate at 3.63% and interest on reserve balances at 3.65%, the gap is razor-thin—signaling that reserves are getting less abundant. Hosts Lucas and Luna explore recent data from the Fed's weekly H.4.1 release, the dynamics of the overnight repo market, and the lessons of September 2019, when reserves…
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