Topic
Six questions about the September 10 decision, answered with the arithmetic rather than the adjectives. The whole argument turns on $38bn a month and who has to buy it instead.
Three of the twelve voters objected to sending all reinvestment into bills rather than to holding the policy rate. That split is about who bears duration risk, and it does not resolve until the December review.
Policymakers stopped shrinking the portfolio on Wednesday and will direct maturing proceeds to Treasury bills. The signal reads as neutral on the policy rate and distinctly negative for duration.
A backstop that lends cash against Treasury collateral at a fixed rate should cap the secured funding rate. In late August it did not, and the reasons say more about the plumbing than about the level of reserves.
The morning brief
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