Roberto Perli, director of the Federal Reserve Bank of New York’s open market account, said in a speech Tuesday that markets do not view the 50 basis point rate cut by the Federal Open Market Committee as an indication of the strains facing the economy. Reuters with informationor:
- Market intelligence gathered by the New York Fed indicated that investors “are likely to interpret the 50 basis point rate cut for what it is — a recalibration of the FOMC’s policy toward a more neutral stance that will help maintain the strength of the economy and labor market while continuing to enable further progress on inflation.”
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The Federal Reserve System Open Market Account (SOMA) is the central portfolio that the Federal Reserve uses to conduct monetary policy. It holds securities that the Federal Reserve buys and sells through open market operations, primarily U.S. Treasury securities, agency debt, and mortgage-backed securities. The SOMA is a key tool for influencing short-term interest rates and managing the money supply. By adjusting the size and composition of this portfolio, the Federal Reserve can influence liquidity, credit conditions, and the overall stance of monetary policy in the economy.
In addition to domestic assets, SOMA also holds assets in foreign currencies, allowing the Federal Reserve to participate in foreign exchange markets when necessary. The Federal Reserve Bank of New York manages SOMA on behalf of the entire Federal Reserve System.
Federal Reserve Bank of New York