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Liquidity: Difference between revisions
→Assestment:
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==Assestment:== | ==Assestment:== | ||
Currently sata shows liquidity forces that are working opposite to each other: | |||
* The FED QT trying to remove liquidity from the market throug it balance sheet reduction | |||
* The tresuary TGA draning due to the debt limit adding liquidity to the market | |||
* RRP has ramain mostly stable, but has added 200 B to the market recently. | |||
Even though we are already seeing the effect of QT in bank reserves, M2 and bank deposits, the effect until now has been limited, for the reasons listed above. | |||
We expect the TGA issues to be resolve in the coming months, and the tailwind to liquidity to end, especially with treasury start to issue debt again and build the TGA account again, this will remove liquidity from the markets at a double pace (QT and TGA building). This will have a negative effect on: | |||
* Financial markets | |||
* Inflation | |||
* Economic Growth | |||
Until then, the stabilization of financial contiditions will most likely continue for a few more months. | |||
==References== | ==References== | ||
<references /> | <references /> | ||