Bernanke outlines exit strategy

Before Bernanke testifies before Congress today for his semi-annual economic report, the Fed Chairman wrote an Op-Ed for the Wall Street Journal outlining the exit strategy the central bank will be following in order to tighten the monetary policy.

Basically, it has two parts: one is to raise interest it pays for reserves from banks and two, use various strategies.  These strategies are as follows: perform a reverse repo with financial institutions, GSEs and others; take proceeds from Treasury’s sale of bills; offer term deposits to banks; and finally, sell a part of Fed’s holdings to market.

See his entire op-ed HERE.


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