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Read. Follow. Verify.Federal Reserve Semiannual Monetary Policy Report Hearing
Record date · January 1, 2019
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What This Bill Does
The Senate Committee on Banking, Housing, and Urban Affairs held a hearing on February 26, 2019, to review the Federal Reserve's and economic oversight. Federal Reserve Chairman Jerome Powell testified regarding the Fed's efforts to normalize its balance sheet and manage bank reserve requirements following the 2008 financial crisis.
This hearing establishes the Federal Reserve's strategy for managing the U.S. money supply and interest rates, which directly influences borrowing costs for mortgages, credit cards, and business loans for all Americans.
Who It Affects
Groups the bill's text affects, as described in the record. Being affected is not a position for or against it.
Financial Institutions
Banks are required to hold specific levels of reserves, which are influenced by the Federal Reserve's regulatory framework and monetary policy.
U.S. Consumers
Monetary policy decisions made by the Federal Reserve impact interest rates for consumer loans and the broader economic environment.
Key Facts
- The Federal Reserve's balance sheet grew from approximately $800 billion in 2007 to a peak of $4.5 trillion by 2015.
- As of February 2019, the Federal Reserve's balance sheet stood at approximately $4 trillion.
- Bank reserve balances peaked at $2.8 trillion in 2014 and declined to $1.6 trillion by January 2019.
- Chairman Powell stated that the ultimate size of the Fed's balance sheet will be determined by financial institutions' demand for reserves plus a buffer.
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- The Fed intends to normalize its balance sheet to avoid frequent, sizable market interventions.
- The hearing was held pursuant to the Full Employment and Balanced Growth Act of 1978.
- The committee received written responses to questions from 11 different Senators regarding monetary policy and regulatory activities.
Frequently Asked Questions
What is the 'balance sheet' of the Federal Reserve?
Why does the size of the Fed's balance sheet matter to me?
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News Coverage
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Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Balance Sheet Normalization Strategy
The Fed shifted its strategy to maintain a larger balance sheet than previously estimated to accommodate higher post-crisis demand for bank reserves.
Connected Entities
Sources
www.govinfo.gov
Analysis Score
0–100- Significance85How much this matters to a regular citizen
- Controversy30Intensity of disagreement among stakeholders
- Entertainment10Compellingness for a non-policy-wonk reader
- Buzz20Current news / social attention level
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