In the Statement Regarding Repurchase Agreement Arrangements released on July 28, 2021, the Federal Reserve announced the establishment of a domestic standing repo facility (SRF). The Federal Reserve continued to offer overnight repos and, amid the COVID-related stress around March 2020, term and overnight repos played an important role in ensuring that the supply of reserves remained ample and supporting the smooth functioning of short-term U.S. In September 2019, the Federal Reserve used term and overnight repurchase agreements (repo) to ensure that the supply of reserves remain ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation. From the end of 2008 through October 2014, the Federal Reserve greatly expanded its holding of longer-term securities through open market purchases with the goal of putting downward pressure on longer-term interest rates and thus supporting economic activity and job creation by making financial conditions more accommodative.ĭuring the policy normalization process that commenced in December 2015, the Federal Reserve first used overnight reverse repurchase agreements (ON RRPs)-a type of OMO-as a supplementary policy tool, as necessary, to help control the federal funds rate and keep it in the target range set by the FOMC. The Federal Reserve's approach to the implementation of monetary policy has evolved considerably since the financial crisis, and particularly so since late 2008 when the FOMC established a near-zero target range for the federal funds rate. Before the global financial crisis, the Federal Reserve used OMOs to adjust the supply of reserve balances so as to keep the federal funds rate-the interest rate at which depository institutions lend reserve balances to other depository institutions overnight-around the target established by the FOMC. The short-term objective for open market operations is specified by the Federal Open Market Committee (FOMC). Open market operations (OMOs)-the purchase and sale of securities in the open market by a central bank-are a key tool used by the Federal Reserve in the implementation of monetary policy.
0 Comments
Leave a Reply. |