John C Williams: Money markets and the federal funds rate - the path forward

Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Outlook 2019, New York City, 17 October 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

As prepared for delivery

Good afternoon, everyone. When I give a closing keynote I try to bear in mind that you've been listening for hours to complex and technical material. I wish I could say that I'm here to offer some light relief, but, alas, no.

The topic I'm going to address this afternoon is both complex and technical. It's the recent turmoil in the repo markets and the Fed's actions to address it.

I'm going to start by laying out the Fed's operating framework for carrying out monetary policy. This will take me into aspects of the "plumbing" of the financial system, which may seem like an esoteric topic to many, but it's one of critical importance, so please bear with me.

I will then go over the money market turmoil from a month ago that led the New York Fed to conduct open market operations to stabilize short-term interest rates. I'll conclude by describing the path forward as laid out in the Fed announcements this past Friday.