|10:15||Dudley and Rosengren|
On Fed balance sheet panel
|11:00||Monetary policy report|
Fed releases semi-annual monetary policy report
|13:30||Mester (FOMC voter)|
On panel with ECB's Coeure in NY
|15:00||Treasury investor class auction data||Mid-February data|
|15:40||Williams (FOMC voter)||On outlook for US economy|
There are no major indicators scheduled for release today. The economic data calendar will pick up a little steam after the weekend. Highlights for next week include consumer confidence on Tuesday, the latest revision to Q4 GDP on Wednesday, as well as the PCE and construction reports on Thursday.
The Fed has a full analytical agenda ahead of it this year. There are longstanding questions about its communications strategy to consider, and a number of FOMC members are in favor of a fundamental rethink of the Fed’s flexible inflation targeting framework. This week’s MMO focuses on a narrower technical issue. We think the optimal long-run size of the Fed’s balance sheet is much larger than generally assumed in baseline simulations. We see no reason for the Fed to push bank reserves below $1.5 trillion, which is a level that is likely to be reached within the next year. It is not too early for the FOMC to begin to focus on the question of what the stopping point for balance sheet normalization should be.