A Fed official backs sticking with crisis-era policy method
NEW YORK The Federal Reserve's current use of two relatively new tools to lift interest rates - its reverse repurchase facility and its rate on excess bank reserves - has proven to work well, suggesting the Fed may not revert to a more traditional policy model, a top U.S. central banker said on Wednesday.
The current so-called floor system "works effectively," San Francisco Fed President John Williams told reporters when asked whether he favours eventually reverting to the traditional "corridor" model in which banks would hold far less excess reserves.
Now that the financial crisis is well in the rear view mirror, Fed staffers and policymakers are quietly working on a longer-term plan for how the central bank will control its key policy rate.
(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)