Pimco’s Wilding Says Fed Has Been Effective in Adding Reserves

The transcript discusses the Federal Reserve's recent actions to manage monetary policy through technical adjustments in reserves, aiming for efficient transmission. It highlights the impact on money markets, the Fed funds rate, and the balance sheet operations, clarifying the lack of direct connection to risk assets. The conversation shifts to inflation, exploring the Fed's strategic shift towards average inflation targeting and its implications for unemployment and financial stability. The Fed's willingness to tolerate above-target inflation and its reactive stance to economic growth are also examined.

What was the primary goal of the Federal Reserve's technical adjustment in reserves?

• To reduce government debt

• To decrease inflation

• To improve monetary policy transmission

• To increase interest rates

How did the Fed's balance sheet operations affect risk assets according to the discussion?

• They led to a decrease in liquidity

• They caused a major drop in bond yields

• They had a limited impact on riskier market segments

• They significantly increased equity prices

What is the Fed's stance on inflation as discussed in the video?

• The Fed is willing to tolerate some above-target inflation

• The Fed aims to keep inflation below target

• The Fed plans to eliminate inflation entirely

• The Fed wants to double the inflation rate

What does average inflation targeting imply for the Fed's monetary policy?

• The Fed will only focus on current inflation rates

• The Fed will increase interest rates immediately

• The Fed will ease policy even if inflation is below target

• The Fed will ignore unemployment rates

What might the Fed do if economic growth starts to disappoint?

• Focus solely on trade tensions

• Ignore inflation targets

• Become more reactive to growth changes

• Increase interest rates