New York Fed President Williams on the 22nd defended the Federal Reserve's monetary policy framework while indicating that adjustments and fine-tuning are possible in response to changes in financial markets. In prepared opening remarks for a conference on the U.S. Treasury market held at the New York Fed, Williams said the current set of tools for managing short-term interest rates and supplying the financial system with "ample" reserve balances has "proven to be highly effective in managing interest rates and supporting the smooth functioning of core financial markets." Williams did not address the outlook for monetary policy or interest rates in his remarks, and he is not scheduled to take questions after speaking at the conference. Williams noted that while the Fed's interest rate framework has worked well, it is not fixed and can be adapted to changes in market conditions, saying, "As markets evolve over time, we must ensure that our policy tools remain appropriate for fulfilling the functions we need." He also said that under Chair Warsh, the Fed has established multiple task forces to broadly examine its approach to communication, how it evaluates data, and how it handles its still-large balance sheet, adding, "There should be little or no opportunity cost to holding reserves at a central bank."
