Federal Reserve Bank Official Discusses “Money Markets After Liftoff”

Simon M. Potter, executive vice president of the Federal Reserve Bank of New York and manager of the System Open Market Account for the Federal Open Market Committee, spoke at SIPA on February 22.

His remarks focused on the tools the Federal Reserve has implemented since December 2015’s “liftoff,” when the Fed decided to raise interest rates for the first time since 2006.

The primary mechanism Potter discussed was the overnight reverse repurchase program, which allows the Fed to sell a security and simultaneously repurchase it the next day. He identified three “lenses” with which to evaluate the efficacy of this tool: interest rate control, avoiding unintended impacts on the rest of the financial system, and avoiding augmenting risk of financial instability.

Potter said that, overall, the RRP program has given the Fed “excellent control” over rates.

Potter’s remarks were followed by a Q&A moderated by SIPA senior research scholar Patricia Mosser.

“Money Markets After Liftoff: Assessment to Date and the Road Ahead,” was presented as part of SIPA’s new central banking initiative, which Mosser directs. Dean Merit E. Janow introduced the event.

— Lindsay Fuller MPA ’16