Fed's Williams Says Bond Purchases May Start Soon as Reserves Approach Adequate Levels

Federal Reserve Bank of New York President John Williams said on Nov. 8 that the central bank may need to begin bond purchases soon to expand its balance sheet, Jin10 reports. Williams stated the next step involves determining when reserve levels move from slightly above adequate to adequate, at which point a gradual asset purchase process should start. He noted sustained repo market pressures and other indicators suggest reserves are shifting from abundant toward slightly above adequate, and some analysts expect the Fed could begin expanding asset holdings in the first quarter of next year. Williams cautioned precise timing remains difficult to determine and emphasized such purchases would maintain liquidity rather than serve as stimulus.