Powell indicated on Tuesday that the kind of funding pressures becoming evident in overnight lending markets would set up the likely end of QT in coming months because officials don't want to find out where the steeper part of the reserve-demand curve sits. But it's worth noting that Miki Bowman, the vice chair for bank supervision, just a few weeks ago endorsed revamping the Fed's operating framework so that the types of funding pressures seen this week would not be unusual, per se. From her speech on Sept. 26: “Over the longer run, my preference is to maintain the smallest balance sheet possible with reserve balances at a level closer to scarce than ample." “Allowing a modest amount of volatility in money markets can enhance our understanding of market clearing points." When Bowman says she would like to be at "a level closer to scarce than ample," it's important to note what those words refer to. If you look at the demand curve for reserves, the current Fed operating framework says they want reserves to be ample. But the post-2019 repo-ruckus Fed has indicated a preference to sit closer to the "abundant" side of ample. Bowman was advocating for being closer to the "scarce" side of ample.(Nick Timiraos)