New York Fed President: The Fed's decision to stop balance sheet reduction is based on market signals.

[New York Fed President: Fed's Decision to Stop Balance Sheet Reduction Based on Market Signals] New York Federal Reserve Bank President John Williams stated that the recent fluctuations in the overnight financing market indicate that the Fed's bank reserves are approaching their ideal level. In prepared remarks for a conference in Frankfurt on Friday, Williams said: “Based on the recent pressures in the repo market and other increasing signs that reserves are transitioning from 'ample' to 'adequate', I expect we will soon reach adequate reserve levels.” Williams also stated that he expects short-term liquidity tools like the Standing Repo Facility to continue to play a “key role” in the money market to ensure that the federal funds rate remains within the target range set by policymakers. He said: “I fully expect that the SRF will continue to be actively used in this way, thereby mitigating upward pressure on money market rates.” (Jin10)