Managing the Fed's Liftoff and Transmission of Monetary Policy
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Managing the Fed's Liftoff and Transmission of Monetary Policy

Managing the Fed's Liftoff and Transmission of Monetary Policy


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About the Book

In recent years, many money and repo rates in the United States have been between zero and 25 basis points. As Fed's liftoff approaches, the question of the level of these rates (and the markets that determine them) becomes increasingly important. The paper discusses (i) whether the Fed can control short-term rates as it starts to tighten; and (ii) what are the advantages and disadvantages of using asset sales versus a large reverse repo program (RRP). A large RRP by the Fed will deprive the financial system of the money pool (i.e., GSEs and money market funds) as the Fed will directly absorb the money on to its balance sheet. This will rust the financial plumbing that connects the money pool to collateral suppliers. Some asset sales may be preferred to a large RRP as this will result in a market-determined repo rate and will allow the Fed to reach its monetary policy liftoff objectives with minimal footprint on market plumbing. We also discuss cost of issuing short tenor T-bills relative to a large RRP in a rising rate environment.

About the Author :
MANMOHAN SINGH, M.Pharm., PhD, has worked in the area of vaccine adjuvants and delivery systems for seventeen years and has authored over eighty-five manuscripts and review articles. Dr. Singh is on the editorial board of five international journals and has contributed several book chapters. He is a Director of Vaccine Research within Novartis Vaccines.


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Product Details
  • ISBN-13: 9781513562315
  • Publisher: International Monetary Fund
  • Publisher Imprint: International Monetary Fund
  • Language: English
  • ISBN-10: 1513562312
  • Publisher Date: 23 Sep 2015
  • Binding: Digital (delivered electronically)
  • No of Pages: 20


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