Finance
New York Fed’s Latest Tool Shows Bank Reserves Are Abundant
- Reserve Demand Elasticity scheduled to be published monthly
- Gauge tracks fed funds rate response to reserve supply shifts
The estimate also uses daily data on the interest on reserve balances rate, as well as weekly data on commercial banks’ total assets.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
The amount of reserves underlying the US banking system remains plentiful, according to a Federal Reserve Bank of New York gauge that will be published monthly.
The first estimates of Reserve Demand Elasticity released on Thursday suggest that reserves were still abundant as of Oct. 11, according to the New York Fed. The data offers the latest evidence that the US central bank can keep removing liquidity from the system via its quantitative tightening program.