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Vice-Chair and Fed’s Quarles says transition away from LIBOR rate needs to be accelerated in comments further to what we heard earlier. 

Key notes

  • Quarles says there was plenty of cash in banking system in September but it wouldn’t move to where it was needed.
  • Quarles says unexpected friction in the movement of cash suggests more reserves are needed.
  • Quarles says it’s important to focus on size of Fed balance sheet relative to GDP, not on absolute size.
  • Quarles says he is not convinced consumer inflation expectations are declining.

Earlier comments

  • US Fed Vice Chair Randal Quarles: There is still slack in the labor market.