As prepared for delivery
Introduction
Thank you for the invitation to speak at this SIFMA event. It is a pleasure to be back with you to discuss financial markets and monetary policy implementation. When I last spoke with this group in July of last year, I shared my views on the marked deterioration in conditions in the U.S. Treasury and agency mortgage-backed securities (MBS) markets at the onset of the COVID-19 pandemic, and the Federal Reserve's asset purchases undertaken to support market functioning.
Asset purchases are ongoing and continue to help foster smooth market functioning and accommodative financial conditions, supporting the flow of credit to households and businesses. This expansion in the Federal Reserve's assets also has the effect of increasing Federal Reserve liabilities-particularly reserve balances-which can have important implications for money markets. Today, I would like to discuss the recent rapid expansion in reserves, and its influence on money market conditions. I plan to share some perspective on how, in this environment, the Federal Reserve's tools will help maintain the federal funds rate well within the target range and support effective policy implementation.
Before I continue, let me note that the views I express today are my own, and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.