Part 4/14:
The conversation examined recent Federal Reserve actions, including their meetings and the current stance on interest rates. Despite market pressures suggesting the possibility of earlier rate hikes due to rising inflation expectations, Fed Chair Jerome Powell reassured markets that rate increases would remain subdued until inflation convincingly surpasses their 2% target over a sustained period.
An important aspect discussed was the suspension of the Supplementary Leverage Ratio (SLR) rule, which temporarily allowed banks to hold more treasuries and reserves, thereby aiding funding amid liquidity strains. The Fed’s decision not to extend this easing indicates a cautious approach toward stabilizing the treasury market, which had been under stress during the COVID-19 onset.