Saturday, June 17, 2017

Fed "Raises Rates" ..... yawn

The Fed moved up the overnight repo rate another 25 basis points by continuing to be the borrower of last resort.  By putting an arbitrary minimum on repos done on their own account they force a minimum onto the market.  Big deal.  No other rates, other than overnight rates, budged.  So much for the Fed raising rates.

The massive excess reserve position of the US commercial banking system precludes any real tightening policy as over $ 3 trillion of bond sales would be required to accomplish that.

Not going to happen.

Instead, we just have more conversation from the Fed and the Fed watchers.  Much ado about nothing.

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