The Federal Reserve is considering lowering the award rate on Reverse Repo Facility assets, which could lower the bottom of the target range of the federal funds rate band. The reason behind this move is speculated to be the recent increase in the Standing Repo Facility and concerns about the sustainability of Quantitative Tightening (QT) without causing strain in the monetary plumbing system. By decreasing the award rate, the Fed aims to encourage outflows from the Reverse Repo Facility and increase bank reserves to ensure ample liquidity. This indicates that the Fed is becoming increasingly concerned about bank reserve liquidity levels. Confirmation of this move will likely be announced at the next Federal Open Market Committee (FOMC) meeting in December.



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