Feds Quarles: Important to focus on size of fed balance sheet relative to GDP, not on absolute size

Vice-Chair and Fed’s Quarles says transition away from LIBOR rate needs to be accelerated in comments further to what we heard earlier. 

Key notes

• Quarles says there was plenty of cash in banking system in September but it wouldn’t move to where it was needed.
• Quarles says unexpected friction in the movement of cash suggests more reserves are needed.
• Quarles says it’s important to focus on size of Fed balance sheet relative to GDP, not on absolute size.
• Quarles says he is not convinced consumer inflation expectations are declining.

Earlier comments

• US Fed Vice Chair Randal Quarles: There is still slack in the labor market.