The Fed can use other tools to sterilize its purchases of mortgage bonds and Treasuries, though it has not ruled out asset sales, he says. Kohn says he is encouraged by the market’s response to the decision to phase out mortgage-backed securities purchases.
Dealers were caught off guard by the order-driven jump in the dollar after Kohn’ s dovish earlier comments initially undermined the dollar. Look for markets to thin out further after intense intraday volatility today.