New York Federal Reserve Bank President John Williams said on Monday that the Fed has the tools it needs to control short-term interest rates at a time when reserves are abundant and rates are drifting lower, as reported by Reuters.

”The Fed can lift the interest rate it pays on excess reserves, known as IOER, or the rate it pays on reverse repurchase agreements, which give financial firms a place to temporarily park cash, Williams told reporters.

Those adjustments would not be viewed as a change in monetary policy, he said.”

Key notes

New York Federal Reserve Williams says the economy is on a very good trajectory but we still have a long ways to go.

Williams says that the Fed’s new framework is about anchoring inflation expectations at the right level.

Says if actual inflation and inflation expectations don’t align the fed will weigh various factors and make a judgment.

Says Fed’s monthly asset purchases of treasury and mortgage securities are about fostering accommodative financial conditions broadly, not just in housing market.

Says fed has the tools to control short-term rates such as adjusting ioer or the rate on overnight reverse repo.

Says adjustments to administered rates would not be a change in monetary policy.

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