Crunching POMO (and the inflationary implications)

MBS prepayments on securities held by the Fed continue very strong. This is boosting POMO (permanent open market operations), since the Fed is now re-investing the cashflow, in Treasury securities.

EPJ's Bob English calculates that POMO for October-November should be at $30 billion plus, per month. This is in addition to any other Fed operations that will start after the elections.

Current POMO is resulting in money supply growth just under 5%.  This suggests that any further Fed balance sheet targeting will boost money supply growth over the very lofty (and very inflationary) annualized 10% rate.