Irish law firm William Fry posted an "EU MMF Reform Update. Writes Niall Crowley, "As reported in the May issue of our Funds ezine, the European Parliament has voted in favour of amendments, proposed by its Committee on Economic and Monetary Affairs (ECON), to the Commission proposal for a Regulation on Money Market Funds (MMF Regulation). Following this vote, it was necessary for Latvia's European Union presidency to facilitate talks in the European Council so that the Council can agree a general approach on the MMF Regulation. However, no progress has been made to date by the Latvian presidency in this regard. The Chair of ECON has urged the Latvian presidency to do their utmost to ensure a general approach is reached as soon as possible. However, it appears unlikely that any significant progress will be made before Latvia hands over the presidency to Luxembourg in July of this year." Also, speaking Friday, New York Fed President and CEO William Dudley said, "I am very confident that the Federal Reserve has the tools in place to ensure that the FOMC can successfully raise the federal funds rate into a new, higher target range when the time comes to do so. This reflects several factors. Most importantly, we have demonstrated that the interest rate paid on banks' reserve balances (IOER) -- which is our primary tool to raise the federal funds rate target -- and daily overnight reverse repo (ON RRP) operations -- which is a supplementary tool to help put a floor under money market rates -- have been effective in keeping the federal funds rate well within the FOMC's desired target range. Moreover, in the unlikely event that the rates we initially selected for the IOER and ON RRP were insufficient to move the federal funds rate into the desired range, we could alter the level of these rates and/or the spread between these rates so as to move the federal funds rate into the desired range. Finally, we also have other tools, such as the Term Deposit Facility and term reverse repo that could be used if needed to help achieve the targeted range for the federal funds rate. While I don't expect that these tools will prove necessary, it is nice to have them available should we need to deal with unanticipated contingencies." He added, "I continue to expect that monetary policy normalization is likely to begin later this year."
