When the Fed Fixes Repo Markets, Don't Call It QE
Bank strategists assist Powell in explaining the nuances behind future balance-sheet growth.
It might be money, but it’s not policy.
Photographer: Paul Yeung/Bloomberg
“Don’t Call It QE.”
With that four-word title, JPMorgan Chase & Co.’s chief U.S. economist, Michael Feroli, effectively summed up Wall Street’s reaction to the weeklong stress in funding markets and Federal Reserve Chair Jerome Powell’s comments about how he and other policy makers would deal with it. At his press conference last week after the central bank’s rate decision, Powell said it’s “certainly possible that we’ll need to resume the organic growth of the balance sheet earlier than we thought.” Among the most likely solutions to rein in short-term rates that briefly spiraled out of control is some sort of permanent open-market operations.