Fed May Be Quietly Masking Extent of Efforts to Calm Repo Market
- Foreign central banks have reduced usage of a U.S. repo pool
- That fits with Fed’s strategy of expanding banking reserves
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Wall Street sleuths are wondering whether the Federal Reserve is quietly doing more to calm the U.S. repo market than just the headline-grabbing liquidity injections that have captivated observers for months.
The New York Fed runs something called the foreign reverse repo pool, a place where other nations’ central banks can park cash. The amount outstanding has shrunk by 18% since peaking at $306 billion in mid-September.