The Fed chair recently specified his initial goal for bank reserves in the US financial system – saying “most important thing [is] to get reserves up to USD 1.5 trillion”. Not only is the Fed’s POMOs helping him do this, in coming weeks Powell will also get some temporary help from the US Treasury. Between the end of October and the middle of December, the average move in the Treasury’s “crisis account” is -100bn (the average of 2016-2018). This means that the US Treasury will likely add 100bn of reserves until then (by mid-December, the crisis account will be quickly rebuilt owing to US tax payments). We should thus ... (full story)