In the post-pandemic world of monetary policy there are now so many variables that it would take a team of analysts to analyze the Fed’s footprint in markets. We have the Fed buying corporate bonds; funding municipalities; funding SMEs and paychecks; backstopping primary dealers and money market funds; acting as the world’s central bank with swap lines; doing ‘regular’ repos and discount window lending. Plus, there is trillion dollars of ‘conventional’ QE after Powell & Co exhausted conventional interest rates. And why not all this central bank largesse? Simple rule-of-thumb policy rules subscribe deeply negative policy rates for the US. A lazy Bloomberg terminal estimate gives us a target federal funds rate of anywhere between minus five to minus seven percent for, though we’ve seen even lower estimates when tinkering with the rules.



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