from a practical standpoint, sales may be complicated in that they would likely be conducted through the sale of individual securities, not through the use of the tba market, because the securities in the soma portfolio might be more valuable than tba cheapest - to - deliver. 33 this complication could eliminate the liquidity advantage provided by transacting in tba. 34 however, it is prudent for the desk to be prepared for a wide variety of scenarios, including sales or the need to purchase additional agency mbs. this flexibility is particularly important given the complex nature of agency mbs and the specialized knowledge and systems required to hold and transact in the agency mbs market. from an implementation perspective, the federal reserve is fortunate to have the option of implementing monetary policy in a large and liquid non - sovereign market with direct implications for existing and prospective homeowners. we have spent the past two days discussing monetary policy implementation in the long run. given the federal reserve ’ s experience in the agency mbs market over the past eight years, it is important to consider what role — if any — agency mbs transactions may have in the policy implementation toolkit of the future. 1 somapurchased agency debt from 1971 to 1981, so participating in one of the agency markets was not entirely new in 2008. in addition, in 2011 – 12 a maturity extension program extended the maturity of treasury securities in the soma portfolio, although it did not expand the size of the soma portfolio. 2 the share is calculated as of october 12, 2016, see system open market account holdings. 3 since the start of the year, these purchases have averaged approximately $ 30 billion per month. in addition to 7 / 10 bis central bankers'speeches conducting these transactions, the desk reinvests maturing proceeds from treasury securities, though the treasury reinvestment transactions take place at auction rather than in the primary market. 4 the accommodative monetary policy stance of the european central bank ( ecb ) rests upon three nonstandard instruments : a series of targeted long - term refinancing operations, a negative deposit facility rate, and an asset purchase program that includes private and public sector securities. the bank of england ( boe ) currently sets the bank rate at 25 basis points and is currently purchasing £60 billion in gilts over a 6 - month period ; the asset purchase facility will have £435 billion in gilts when the purchase round ends in february

william c dudley : the us economic outlook and the implications for monetary policy remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at money marketeers of new york university, new york city, 7 september 2017. * * * good evening. it is a pleasure to have the opportunity to speak at this money marketeers event. in my remarks, i will focus on two topics : 1 ) the economic outlook and the implications for monetary policy, and 2 ) the fed ’ s balance sheet normalization process, which is likely to begin relatively soon. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. 1 overall, the economy remains on a trajectory of slightly above - trend growth, which is gradually tightening the u. s. labor market. over time, this should support a rise in wage growth. when combined with a firmer import price trend — partly reflecting recent depreciation of the dollar — and the fading of effects from a number of temporary, idiosyncratic factors, that causes me to expect inflation will rise and stabilize around the fomc ’ s 2 percent objective over the medium term. in response, the fed will likely continue to remove monetary policy accommodation gradually. but, the upward trajectory of the policy rate path should continue to be shallow, in part because the level of short - term interest rates consistent with keeping the economy on a sustainable long - run growth path is likely to be considerably lower than it was in prior business cycles. the process of balance sheet normalization — in which an increasing proportion of maturing treasuries and agency mortgage - backed securities ( mbs ) repayments are allowed to run off the fed ’ s balance sheet — should also exert some monetary policy restraint over time. but, i believe this impact will be quite modest. not only is this shift in policy now widely anticipated, but we have also seen that the impact on the level of long - term interest rates has been small as expectations have adjusted. economic outlook so, why do i anticipate that the economy will likely continue to grow at a slightly above - trend pace? the fundamentals supporting continued expansion are generally quite favorable. low unemployment, sturdy job gains, and rising wages — even at a pace below previous expansions — are lifting personal income. household wealth has been boosted by rising home and equity prices, and