The US Federal Reserve is prepared to use its vast arsenal of monetary policy tools to prevent financial and economic conditions from deteriorating rapidly but will do so only if liquidity dries up or markets become disorderly, a top central banker said.
In an interview with the Financial Times, Boston Fed President Susan Collins said the central bank “would absolutely be prepared” to backstop markets if needed.
Source: Walter Bloomberg
While it is generally understood that the Fed is always prepared to act quickly to stave off market chaos, Collins’ remarks come on the heels of asset selloffs across stocks and bonds, which have raised concerns about the health of the US financial system.
Overall, however, the Fed is “not seeing liquidity concerns,” said Collins. If that were to change, policymakers would have “tools to address concerns about