Fed's Perilli States RMP Policy Not on Fixed Path, Can Be Suspended

Roberto Perilli, System Open Market Account (SOMA) Manager at the Federal Reserve Bank of New York, stated on July 9 (local time) that the Fed's Reserve Management Purchases (RMP) policy execution is 'not on a fixed path.' Speaking at a New York Fed conference, Perilli emphasized that RMP 'can be adjusted up or down in size in a given month' and can be temporarily suspended if money market conditions justify such action. The SOMA Manager role directs Fed monetary policy implementation under FOMC instructions, making it one of the most important positions within the Federal Reserve system.

FOMC Statement Appendix Adds When Appropriate Language

Perilli explained that the June Federal Open Market Committee (FOMC) statement appendix explicitly reflected the possibility of temporary RMP suspension. The implementation guidance document related to FOMC decisions added the phrase 'When appropriate' at the beginning of the section concerning RMP execution. According to Perilli, this change indicates the flexibility the Fed can utilize if money market conditions ease significantly again.

Fed Maintains Monthly RMP Strategy Within Ample Reserves Range

Perilli stated that the strategy of determining RMP size on a monthly basis has not changed. He mentioned that the Fed will continue to set the size with the goal of maintaining reserves within an ample range. The SOMA Manager position, while not having monetary policy decision-making authority, is considered one of the most important roles within the Fed as it executes policy under FOMC direction.

New York Fed Sets Current RMP Level at $10 Billion

The New York Fed previously set the RMP size at approximately $10 billion for one month through the 13th of this month, the same level as the previous month.

FAQ

What did Roberto Perilli announce about Fed's RMP policy on July 9?

Roberto Perilli, SOMA Manager at the New York Fed, announced that the Fed's Reserve Management Purchases policy is not on a fixed path and can be adjusted up or down monthly. He stated that RMP can be temporarily suspended if money market conditions justify such action.

What change was made to the June FOMC statement appendix?

The June FOMC statement appendix added the phrase 'When appropriate' at the beginning of the section concerning RMP execution. According to Perilli, this change indicates the flexibility the Fed can utilize if money market conditions ease significantly again.