Macro MATTers: A conversation with Patricia Zobel on the Fed’s balance sheet

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Welcome.

You are listening to another episode of Macro Matters on Podzept, a series where we discuss some of the best ideas coming out of Deutsche Bank research.

I'm Matt Luzzetti, Chief U.S.

Economist, and I'm once again joined by Matt Raskin, U.S. Head of Rates Research.

Welcome again, Matt.

Thanks, Matt.

Always fun to do this.

So, Matt, we have been producing a series of notes on the five Fed task forces that Chairman Walsh announced at the June FOMC meeting.

We've been sort of outlining considerations that we think the task forces might take up and our expectations for where things might ultimately land.

We've also planned to devote one of these podcast episodes to each of those task forces and bring in experts to talk through those.

the issues today.

We will be focusing on the Fed balance sheet task force and what changes to the balance sheet and balance sheet policy could ultimately result from that.

We published a note on that topic about a month or so ago.

And for this, we're really excited to be joined today by Patricia Zobel.

Patricia is head of macroeconomic research and market strategy at Guggenheim Investments, where she leads a team of economists and strategists who informed the firm's macroeconomic and asset allocation views.

Before joining Guggenheim, Patricia had a long and storied career at the New York Fed, where among other things, she served as deputy SOMA manager and then acting SOMA manager.

So in that capacity, she managed the Fed's bond portfolio and led the implementation of monetary policy at the direction of the FOMC.

So she's really a perfect guest for the discussion we're going to have today.

So welcome, Patricia.

Thank you so much for joining us today.

Thank you for having me.

I'm looking forward to this discussion.

Yeah, thanks, Patricia.

It's great to have you.

So I think we'll kick off.

We've been structuring this conversation, maybe first some background issues around the balance sheet, then maybe digging into some of the specifics around changes that we might get, and then maybe concluding with some details around the task forces and what they might agree to.

But just to kick off, why is there a task force on the balance sheet? Why are we talking about the balance sheet? Why does the balance sheet matter? And really, what role does it play in monetary policy?