09:21 MNI: INSIGHT: FED MAY SELL ASSETS IF OTHER TOOLS
PROVE INADEQUATE
Sales
of longer term securities from the Federal
Reserve's vast portfolio are not part of the Fed's monetary policy
"normalization" plans, but they haven't been ruled out.
If the Fed's first-line monetary control tools fail to
lift short-term interest rates in a dependable, predictable manner,
it is prepared to resort to other fall-back measures, including asset
sales, MNI understands.
Asset sales are something most Fed policymakers would
like to avoid, as was made clear when the Federal Open Market
Committee published a statement of "policy normalization
principles and plans" on Sept. 17.
To the surprise of few, the FOMC decided to focus
primarily on raising short-term interest rates rather than on
reducing the bloated Fed balance sheet as it gradually removes the
aggressive monetary accommodation it has put
in place since the financial crisis.
The normalization process will not begin at all until
there is a high Level of confidence that the economy is sustainably
growing rapidly enough to make further progress on eliminating labor
market slack and bringing inflation up
to the 2% target.
But when the time for "lift-off" does arrive,
the FOMC's main policy instrument will be raising its policy rate,
the federal funds rate, from Near zero where it has been since
December 2008. The plan is to keep targeting a 25
basis point funds rate range, rather than a specific
point rate.
When the time comes to raise the funds rate target range
from the zero to 25 basis points to, presumably, 25 to 50 basis
points, the FOMC plans to keep it within the new range by deploying
two main Tools.
It plans to set a ceiling for the funds rate by raising
the interest on excess reserves (IOER) rate, from the current 25
basis points. And it hopes to set a floor under the funds rate with
its rate on overnight fixed rate reverse
repurchase agreements.
Unlike the IOER, which is restricted to depository
institutions, the ON RRP facility is open to a much wider array of
counterparties, including government sponsored enterprises (GSEs) and
money market funds. They can get a
guaranteed overnight return by purchasing Treasury
securities from the Fed - essentially lending it money - and selling
it back to the the Fed the next day at a lower, preset price.
Under the latest ON RRP terms, any eligible counterparty
can bid up to $30 billion per day, with an aggregate cap of $300
billion on each operation.
The ON RRP rate is now 5 basis points.
At "lift-off," the Fed would likely raise the
IOER rate to 50 basis points and the ON RRP rate to 30 basis points.
This "corridor" rate scheme, it is hoped, will
enable the Fed to exert "monetary control" over its
targeted policy rate, the federal funds rate and in turn other money
market rates, despite some $2.7 trillion in bank reserves
overhanging the money market and exerting downward
pressure on short-term rates.
By targeting a range, rather than a rate point, the FOMC
is acknowledging there will probably be more fluctuation in the funds
rate than typically existed before the crisis led the FOMC into three
rounds of large-scale asset
purchases that quintupled the Fed balance sheet to $4.5
trillion.
If the funds rate can be kept within a 25 basis point
band except for occasional quarter-end or year-end divergences, most
Fed officials will feel they have largely accomplished their mission.
But what if the IOER and the ON RRP rates do not confine
the funds rate within a 25 basis point range as well as hoped? What
if the funds rate trades more frequently outside of the range?
Specifically - and this is the greatest fear - what if
the Fed needs to raise rates and tighten credit to curtail either
inflation pressures or financial instability but finds itself unable
to effectively raise the funds rate, and in turn the
repo rate and other short-term rates?
What if the funds rate trades frequently or consistently
below the would-be ON RRP floor?
Although Fed officials speak confidently about the
effectiveness of their tools, they are aware of that possibility and
have been brainstorming work-arounds - other tools, other options for
the use of existing tools and, yes,
potential asset sales.
Some supplemental tools are already on the shelf that go
beyond strictly controlling interest rates to managing the supply of
reserves in support of higher rates.
The Fed can, for instance, drain reserves through the
use of more traditional term (as opposed to overnight) reverse
repurchase agreements, in which a financial institution buys a
security from the Fed's portfolio and sells it
back some days later at a higher price, earning a return
on the difference.
Term reverse repos can be rolled over repeatedly to
effectively reduce reserve balances and relieve downward pressure on
rates.
The Fed has also been testing a Term Deposit Facility,
which enables the Fed to drain reserves by letting banks invest
reserves at a slightly higher rate than the IOER (now 26 basis
points) for seven days.
TDF demand has been constrained by banks' reluctance to
tie up funds for a full week. So the Fed is about to start testing
TDF offerings with an early withdrawal feature. It could also
increase the attractiveness of the TDF by
increasing rates and/or bid amounts.
While the FOMC has eschewed, at least initially, asset
sales to actively shrink the balance sheet and reserves it does plan
to passively shrink them by ceasing to reinvest principal payments
from its holdings of agency debt and
agency mortgage-backed securities in agency
mortgage-backed securities and ceasing to roll over maturing Treasury
securities at auction.
The FOMC announced on Sept. 17 the discontinuation of
reinvestments and rollovers would not begin until after the first
rate hike.
Reinvestment may be "tapered," rather than
ended abruptly. Either way, it would tend to relieve downward
pressure on money market rates by erasing some of the voluminous
reserves in the system, make the corridor work
better and strengthen monetary control.
However, the cessation of Treasury reinvestments or
rollovers will likely have only a modest impact at first. This is
because the Fed sold virtually All of its shorter term Treasury
securities while buying longer term securities as
part of its Maturity Extension Program.
The initially $400 billion "Operation Twist"
began in September 2011 and was extended in June of the following
year through the end of 2012. Altogether MEP sales totalled nearly
$634 billion. As a result very few Treasury
notes and bonds mature in 2014 and 2015.
Not until 2016 do Treasury securities begin maturing in
large amounts - $36.7 billion in February alone.
Some combination of the IOER, ON RRP, TDF, term reverse
repos and ceasing reinvestment, it is hoped, will enable the Fed to
raise the funds rate and keep it within range most of the time.
Still other wrinkles could be explored, such as further
adjustments to the ON RRP rates and terms and a broader definition of
the federal funds rate.
But the Fed is prepared for the possibility that those
measures could Fall short.
At that point, it is conceded, the FOMC might have to
resort to asset sales.
That is not the current plan. The FOMC confirmed Sept.
17 it "does not anticipate selling agency mortgage-backed
securities as part of the normalization process."
The FOMC only specifically mentioned MBS sales, MNI
understands, because in its June 2011 exit principles, it had said
"sales of agency securities from the SOMA (system open market
account) will likely commence
sometime after the First increase in the target for the
federal funds rate."
The FOMC does not plan on selling Treasuries either. But
sales of both could be on the table if other tools prove inadequate.
That is not something most officials want to discuss out
loud, but last week, asset sales were mentioned by Simon Potter,
executive vice president of the Federal Reserve Bank of New York.
"However, if the pressure on market rates from the
Fed's administered rates turns out to be insufficient, the Committee
has a range of other tools - including term deposits, term RRPs, and
asset sales - that could be used to
help tighten the stance of policy," said Potter who
runs the New York Fed's open market trading desk.
In late September, Cleveland Fed President Loretta
Mester said, "I do not view asset sales as a necessary tool for
controlling interest rates. But Once normalization is underway, I
would be open to considering a gradual path of
asset sales over time as a way to return the balance
sheet more quickly to the more normal size and composition we
anticipate it to have over the longer run."
It is known that a willingness to sell assets, however
reluctantly, is shared by other Fed officials.
If
the Fed is forced to resort to asset sales, it would likely announce
that, contingent upon economic and financial conditions, it will
reduce its portfolio of Treasuries and/or MBS by so much per month.
(Market News
International)
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SUGESTÃO DE TRADUÇÃO---------------------------------------
FED
PODERÁ VENDER ATIVOS CASO OUTRAS MEDIDAS SE MOSTREM INADEQUADAS.
A
venda dos títulos de longo prazo que compõem seu vasto portfólio
não faz parte do plano de política monetária do Federal Reserve
(FED) para normalização da economia. Todavia, não é uma opção
totalmente descartada.
No
entendimento do MNI (Market News International), caso as ferramentas
usuais de controle monetário utilizadas pelo FED para elevar as
taxas de juros de curto prazo não funcionem de forma confiável,
medidas alternativas poderão ser utilizadas, como por exemplo, a
venda de ativos.
A
venda de ativos é uma ação que os formuladores de políticas do
FED gostariam de evitar, como ficou claro quando o Comitê de Mercado
Aberto (FOMC) publicou uma declaração de “planos e princípios
de política de normalização” em 17 de setembro.
Para
a surpresa de alguns, o FOMC decidiu priorizar a elevação de taxas
de juros de curto prazo ao invés de eliminar o inchaço no Balanço
do FED, diminuindo gradualmente, dessa forma, a agressiva acomodação
monetária que colocou em vigor desde a crise financeira.
O
processo de normalização só terá início de fato, quando houver
confiança de que a economia está crescendo de forma rápida e
sustentável, o suficiente para eliminar a folga existente no mercado
de trabalho e elevar a inflação para a meta de 2%.
Quando
chegar a hora, o principal instrumento do FOMC será elevar as taxas
dos fundos federais dos atuais quase zero onde permanecem desde
dezembro de 2008. O plano é estabelecer como meta um intervalo de
25 pontos-base para taxa e não um valor específico.
No
momento de elevar a meta do intervalo atual de taxas, zero a 25
pontos, para prováveis 25 a 50 pontos, duas principais ferramentas
serão utilizadas.
O
plano é elevar o teto da taxa de juros dos fundos federais,
atualmente em 25 pontos-base, por meio do aumento dos juros sobre as
reservas excedentes (IOER). Estabelecendo também, um piso para as
taxas dos fundos baseado nas taxas fixadas em operações de
overnight com compromisso de recompra reversa.
Ao
contrário da IOER que é restrita à determinadas instituições
financeiras, as operações de Open Market conhecidas como ON RRP (
compromisso de recompra reversa) são permitidas a uma variedade
maior de contrapartes, incluindo as GSE’s (empresas privadas
contratadas pelo governo para prestação de serviços públicos) e a
fundos mútuos de investimentos (tipo MMF), que ao comprar títulos
federais, têm garantido um retorno diário – na prática um
empréstimo com o compromisso de que o título será recomprado pelo
governo no dia seguinte por um preço pré-definido.
Pelas
regras atuais, a contraparte pode oferecer até 30 bi de dólares por
dia, sendo o valor agregado máximo permitido de 300 bi em cada
operação.
Atualmente
a taxa das ON RRP está em 5 pontos-base.
A
intenção do FED é elevar para 50 pontos-base a taxa para a IOER e
para 30 pontos-base a taxa das ON RRP.
Com
tal esquema, o FED espera conseguir exercer controle monetário sobre
a taxa diretora que é a dos fundos federais e por conseguinte em
outras taxas do mercado monetário, apesar dos 2,7 trilhões em
reservas bancárias exercendo pressão de baixa nas taxas de curto
prazo.
Ao
dar preferência a estabelecer um intervalo de taxas e não um valor
específico, o FOMC admite que, provavelmente, haverá mais flutuação
das taxas dos fundos do que antes da crise que levou a três rodadas
de compra de ativos em larga escala e quintuplicou o balanço
patrimonial do FED para US$ 4,5 trilhões.
Caso
a taxa dos fundos puder ser mantida dentro de 25 pontos-base,
excetuando alguns períodos como finais de trimestre ou de ano, a
maioria das autoridades do FED sentirá ter atingido plenamente sua
missão.
Mas
e se o esquema não funcionar e a taxa dos fundos não ficar limitada
ao intervalo esperado dos 25 pontos-base? E em caso de as negociações
com as taxas dos fundos ocorrerem com frequência fora da faixa
desejada?
E
se, e este é o maior receio, o FED necessitar elevar as taxas,
apertando o crédito para diminuir as pressões inflacionárias e a
instabilidade financeira, e ainda assim não for capaz de elevar as
taxas dos fundos e consequentemente outras taxas de mercado,
inclusive as de curto prazo?
E
se as negociações com as taxas dos fundos ocorrerem frequentemente
abaixo do limite inferior do intervalo desejado para as ON RRP?
Embora
o discurso oficial do FED demonstre confiança nos instrumentos à
sua disposição, há consciência das questões levantadas acima e
outras linhas alternativas de ação estão sendo preparadas,
inclusive a venda de ativos.
Alguns
dos instrumentos adicionais já estão prontos para uso e vão além
do estrito controle das taxas de juros para gerenciar o
aprovisionamento de reservas que permitam a manutenção de altas
taxas.
O
FED pode, por exemplo, reduzir as reservas utilizando um meio
tradicional (oposto ao overnight) como as operações de RRP, nas
quais uma instituição financeira compra um título do portfólio do
FED e o vende de volta alguns dias depois por um preço maior,
lucrando com a diferença.
Tais
operações podem ser feitas repetidas vezes para reduzir as reservas
e pressionar uma baixa das taxas.
Mas
esse não é o plano atual. Em 17 de setembro, o FOMC confirmou que
não irá antecipar a venda dos títulos lastreados nas hipotecas dos
empréstimos imobiliários (MBS) como parte do processo de
normalização.
Tendo
o FOMC mencionado apenas as MBS, o MNI baseando-se nos chamados
planos estratégicos para normalização datados de junho de 2011,
entende que as vendas de títulos oriundos do SOMA(operações de
open market) devem ter início em algum momento após a primeira
elevação da meta para as taxas dos fundos.
O
FOMC não planeja vender Treasuries desde que as ferramentas em uso
se mostrem adequadas.
Embora
não seja algo que as autoridades queiram alardear, na última semana
a venda de ativos foi mencionada por Simon Potter, vice-presidente
executivo do FED de Nova York.
“No
entanto, se a pressão do FED sobre as taxas, via taxas
administradas, não for suficiente, temos uma série de outros
instrumentos – incluindo os Termos de Depósito, as RRPs e a venda
de ativos – que poderiam ser usados para reorientar a política,”
disse Potter que atua na mesa de operações de open market de Nova
York.
Em
setembro último, a Presidente do FED de Cleveland Loretta Mester
disse, “Eu não acho que a venda de ativos seja necessária para
controlar as taxas de juros. Mas quando a normalização estiver
acontecendo, eu consideraria a venda gradual de ativos como um
caminho para devolver mais rapidamente aos balanços o tamanho e
composição que julgamos corretos no longo prazo”.
Sabe-se
agora que a disposição para vender ativos, embora com certa
relutância, é compartilhada por outros presidentes do FED.
Se
o FED tiver que recorrer a venda de ativos é provável anunciar que, dadas as condições econômicas e financeiras, irá reduzir
mensalmente de seu portfólio os títulos Treasuries e/ou MBS.
(MARKET
NEWS INTERNATIONAL)
