The New York Federal Reserve President has indicated that lower interest rates are expected as a response to inflationary pressures. The President emphasizes the importance of monitoring markets and being aware of warning signs that indicate the sensitivity of interest rates to daily fluctuations. Statistical methods are being developed to better analyze market volatility and its relationship to ample reserves. The President highlights the cybersecurity risks that financial institutions and central banks face and the ongoing efforts to ensure system security. Additionally, concerns are raised regarding the functioning of the U.S. Treasury market, which is considered the core market in the global economy. The President emphasizes the need to strengthen liquidity and resilience in the Treasury market, as well as in closely-related markets. References are made to previous events that have affected liquidity in Treasury markets and the importance of investing in this area. The successful transition away from the flawed LIBOR reference rate is also mentioned as a reminder to monitor small but potentially growing risks in the financial sector.
