Fed’s balance sheet reduction is likely to take place when markets are functioning well
“We’ve certainly seen recent developments lead to notable volatility and declines in market liquidity,” Lorie K. Logan, an executive vice president with the New York Fed, said recently during a virtual event organized by New York University.
“But so far, outside of Russian markets … our sense is that broader markets have been functioning in an orderly way.”
She explained that the Federal Reserve’s balance sheet and its overnight lending facilities are providing liquidity and helping financial markets function smoothly despite volatility seen after Russia invaded Ukraine.
There has been no reaction to her comments. The US dollar edged higher Wednesday as investors continue to worry about the impact of an escalating conflict in Ukraine.
