Fed's Williams (Voter) says there is good understanding about ways to shift demand for reserves; Balance sheeet debate should not be about the nominal size of holdings

Balance Sheet Reforms to liquidity regulations should bear in  mind bank safety issues. Unclear how much smaller Fed balance sheet can get. Fed's goal with balance sheet is about interest rate control. Balance sheet policy will react to regulator changes. Economy/Policy Inflation is far too high. Markets still expect oil prices to come down over the next 6-12 months, view is reasonable. Monetary Policy is focused on how energy prices impact inflation. AI investment is a driver of inflation. Tariffs impact on inflation close to its peak. Fed Minutes captures a "collective reaction function" Will get inflation back to 2%. Key to look at underlying inflation actors; not just a specific measure. Government technical changes could better reconcile PCE inflation and CPI differences. Policy to remain data dependent. Will have to see how monetary policy reacts to data. Labur market has been very stable. Risk is currently more on the inflation side. 0.2% monthly PCE in H2 will be consistent with the goal. Still uncertainty about longer term neutral rate. Timeline for Fed task forces is pretty aggressive. Ample reserves is the state of money markets, not a specific number. AI: In the longer run, AI investment will be a positive supply shock. Base case sees broader use of AI that boosts productivity. Task Forces:Fed task forces a timely chance for officials to think about policies.Standing Repos: Standing repo operations should be seen as business as usual. Central clearing of standing repos likely to bring benefits.