Fed's Daly tells Bloomberg she's focused on mandates amid Treasury actions
TLT•Policy is in a good place, Daly says
Daly said monetary policy was in a “good place” and that she strongly supported the Fed’s decision at the end of July to hold its 3.5% to 3.75% federal funds rate target range steady.
Daly was asked how the Fed might navigate a shift in Treasury debt issuance to more short-term borrowing over longer-term debt. More issuance at the front end of the market could put upward pressure on borrowing costs there, which could create challenges for how the Fed manages interest rate policy.
The Fed’s rate control system depends on influencing money market conditions to manage interest rates by way of a series of tools and liquidity facilities. Central bank officials have flagged what they see as great and long-running success in that endeavor. That said, shifting Treasury borrowing patterns raise questions as to who is the key manager of financial conditions.
