Secrets of the Federal Reserve’s Unconventional Monetary Policy | William English, former Director of Division of Monetary Affairs for the Fed Board of Governors, on Quantitative Easing (QE) and Forward Guidance

Forward Guidance is sponsored by VanEck. Learn more about the VanEck Morningstar Wide MOAT ETF (MOAT) at https://vaneck.com/MOATFG.
William English’s work at the Yale Program on Financial Stability: https://som.yale.edu/faculty-research/faculty-directory/william-b-english
William English’s co-authored new book, “Monetary Policy Responses to Post-Pandemic Inflation”: https://cepr.org/about/news/press-release-new-cepr-ebook-monetary-policy-responses-post-pandemic-inflation
William English’s co-authored Chapter on the Fed’s Balance Sheet: https://www.elgaronline.com/edcollchap/book/9781800375321/book-part-9781800375321-7.xml
William English’s 2012 paper on the rationale and effects of QE: https://www.federalreserve.gov/econres/feds/the-federal-reserve39s-large-scale-asset-purchase-programs-rationale-and-effects.htm
“Interest Rate Risk and Bank Equity Valuations”: https://www.federalreserve.gov/econres/feds/interest-rate-risks-and-bank-equity-valuations.htm
Follow VanEck on Twitter https://twitter.com/vaneck_us
Follow Jack Farley on Twitter https://twitter.com/JackFarley96
Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance
Follow Blockworks on Twitter https://twitter.com/Blockworks_
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Timestamps:
(00:00) Introduction
(01:31) Fiscal Policy & Monetary Policy Never Really Were Separated. But It Would Nice If They Were
(03:49) Do High Interest Rates Dissuade Government Borrowing?
(07:09) The Fed Doesn't Like To Discuss Fiscal Policy
(09:53) The Fed's Balance Sheet Expansion of 2020 & 2021
(13:57) The Effects of Quantitative Easing (QE), In Theory And Practice
(18:59) I Don't Remember Us (The Fed) Thinking A Lot About Negative Interest Rate Policy (NIRP)
(23:41) VanEck Ad
(24:22) The October 2008 Decision To Allow The Fed To Pay Interest On Reserves Assisted the Implementation of Quantitative Easing (QE), Which Began ~1 Month Later
(29:15) The Striking Thing About The Asset Purchases Was The Size
(32:32) Forward Guidance vs. QE: Which Is More Powerful, And Which Has More Knock-on Effects?
(36:27) Forward Guidance Is More Powerful When Initial Market Expectations About Future Policy Rates Are Incorrect
(44:37) Flexible Average Inflation Targeting (FAIT) Framework Adopted By The Fed In 2020
(52:48) Fast QE & Slow QT = Secular Rise In Size of Fed Balance Sheet
(57:27) Fed's Decision To Slow Pace of QT Was Due To Desire To Avoid a "Snafu" In Money Markets Such As In September 2019
(01:02:36) The Bernanke Doctrine: Should Interest Rate Policy & Balance Sheet Policy Always Be Pointed In The Same Direction?
(01:07:12) If Balance Sheet Policy Is Moving The Opposite Direction Of Interest Rate Policy, Does That Weaken The Signaling Impact Of Balance Sheet Policy?
(01:11:50) Lowest Comfortable Level of Reserves (LCLoR)
(01:19:34) Impact Of Interest Rate Movements On Bank Equity Valuations

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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Forward Guidance is sponsored by VanEck. Learn more about the VanEck Morningstar Wide MOAT ETF (MOAT) at https://vaneck.com/MOATFG.

William English’s work at the Yale Program on Financial Stability: https://som.yale.edu/faculty-research/faculty-directory/william-b-english

William English’s co-authored new book, “Monetary Policy Responses to Post-Pandemic Inflation”: https://cepr.org/about/news/press-release-new-cepr-ebook-monetary-policy-responses-post-pandemic-inflation

William English’s co-authored Chapter on the Fed’s Balance Sheet: https://www.elgaronline.com/edcollchap/book/9781800375321/book-part-9781800375321-7.xml

William English’s 2012 paper on the rationale and effects of QE: https://www.federalreserve.gov/econres/feds/the-federal-reserve39s-large-scale-asset-purchase-programs-rationale-and-effects.htm

“Interest Rate Risk and Bank Equity Valuations”: https://www.federalreserve.gov/econres/feds/interest-rate-risks-and-bank-equity-valuations.htm

Follow VanEck on Twitter https://twitter.com/vaneck_us

Follow Jack Farley on Twitter https://twitter.com/JackFarley96

Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance

Follow Blockworks on Twitter https://twitter.com/Blockworks_

__

Timestamps:

(00:00) Introduction

(01:31) Fiscal Policy & Monetary Policy Never Really Were Separated. But It Would Nice If They Were

(03:49) Do High Interest Rates Dissuade Government Borrowing?

(07:09) The Fed Doesn't Like To Discuss Fiscal Policy

(09:53) The Fed's Balance Sheet Expansion of 2020 & 2021

(13:57) The Effects of Quantitative Easing (QE), In Theory And Practice

(18:59) I Don't Remember Us (The Fed) Thinking A Lot About Negative Interest Rate Policy (NIRP)

(23:41) VanEck Ad

(24:22) The October 2008 Decision To Allow The Fed To Pay Interest On Reserves Assisted the Implementation of Quantitative Easing (QE), Which Began ~1 Month Later

(29:15) The Striking Thing About The Asset Purchases Was The Size

(32:32) Forward Guidance vs. QE: Which Is More Powerful, And Which Has More Knock-on Effects?

(36:27) Forward Guidance Is More Powerful When Initial Market Expectations About Future Policy Rates Are Incorrect

(44:37) Flexible Average Inflation Targeting (FAIT) Framework Adopted By The Fed In 2020

(52:48) Fast QE & Slow QT = Secular Rise In Size of Fed Balance Sheet

(57:27) Fed's Decision To Slow Pace of QT Was Due To Desire To Avoid a "Snafu" In Money Markets Such As In September 2019

(01:02:36) The Bernanke Doctrine: Should Interest Rate Policy & Balance Sheet Policy Always Be Pointed In The Same Direction?

(01:07:12) If Balance Sheet Policy Is Moving The Opposite Direction Of Interest Rate Policy, Does That Weaken The Signaling Impact Of Balance Sheet Policy?

(01:11:50) Lowest Comfortable Level of Reserves (LCLoR)

(01:19:34) Impact Of Interest Rate Movements On Bank Equity Valuations

__

Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.