few aspects of understanding what's going on in markets. 1 / 5 bis - central bankers'speeches and policymakers like me aren't the only ones who are data dependent. businesses, households, journalists, and so many others rely on data to support their understanding of the world around them. capital mistake to be clear, having access to an abundance of data is a wonderful problem to have. think about the plethora of data you can pull from a terminal and the endless ways to use it. many of us have spent more hours than we'd like to admit analyzing, plotting, and running regressions on data. and while we assume that most data are " good, " there are, unfortunately, " bad " data, too. the very same terminal that gives you access to numbers that are supported by millions of transactions could also give you access to numbers that have not seen a transaction in quite some time, if ever. and it can be very hard - too hard, in fact - to spot the difference. this is dangerous. i will echo the warning of our detective friend sherlock holmes : " it is a capital mistake to theorize before one has data. " i'll go a step further and say that it is a capital mistake to theorize before one fully understands the origins of the data one has downloaded. libor no more ( but still important ) of course, the prime example of a capital mistake of this nature is libor. which, by the way, officially ended 139 days ago, not that i'm still counting. 2 3 good riddance! ok, i had to slip in one music reference, but that's all. the lesson of libor is that there are times when what we think of as strong financial market data is only a mirage. libor was one of the most widely used benchmarks in the world, underpinning hundreds of trillions of dollars - that's trillions, with a " t " - of financial instruments and contracts. we all know how that ended : libor was inherently fragile and subject to manipulation. it is astonishing to think about the entire global financial system relying on the small set of transactions underlying libor. in fact, during periods of financial market stress, libor was based on no transactions, which is what opened the door to the fraud and bad behavior we now associate with it. libor was a wake - up call. it led to the collective realization that things we think

learned that the ample reserves framework has worked smoothly with a level of reserves at least as large as we saw during summer and into early september. although temporary open market operations are doing the trick for the time being, anticipated increases in non - reserve liabilities would cause reserves to decline in coming months without further actions. based on these considerations, last friday the fomc announced that the fed will be purchasing u. s. treasury bills at least into the second quarter of next year. 7 specifically, the desk announced an initial monthly pace of purchases of $ 60 billion. these permanent purchases will, over time, bring the underlying level of reserves — by which i mean absent temporary open market operations — to a level consistent with the ample reserves framework on a sustained basis. in concert with these purchases, the fomc announced that the desk will continue temporary overnight and term open market operations at least through january of next year. 8 this combination of permanent treasury bill purchases and ongoing temporary open market operations is designed to provide effective control of the federal funds rate over the next several months. i should emphasize that all of these actions are aimed at the implementation of monetary policy and do not in any way represent a change in the stance of monetary policy. the goal is to make sure that the federal funds rate stays within the target range set by the fomc. as we move forward, we will continue to learn about demand for reserves and other federal reserve liabilities and market functioning, and may adjust the specifics of the plan as appropriate. what does all of this mean for sofr? that ’ s a lot on monetary policy, interest rates, reserves, and repos. but before i close, i ’ d like to emphasize an important point about a particularly important repo benchmark rate, and that ’ s the secured overnight financing rate, or sofr. sofr is the reference rate that the alternative reference rates committee ( arrc ) has selected as the preferred replacement for libor. at the same time that we saw turmoil in the repo market, we saw a temporary spike in sofr. as market participants make preparations to transition away from libor, they ’ re understandably watching sofr very closely. there are a few things i ’ d like to highlight with respect to sofr. first, a temporary spike is not surprising, given that sofr reflects rates on real - world transactions. second, the very fact that we saw a spike in sofr is an indication of how representative