Fed to wean banks off daily repos later this year
Total reserves may need to be higher than Fed initially judged as demand for repo operations remains strong
The Federal Reserve will begin weaning banks off its daily liquidity injections later this year, governor Richard Clarida signalled in a January 9 speech.
Clarida said once the Fed’s outright Treasury security purchases supply a large enough base of reserves to the system, “it may be appropriate to gradually transition away from active repo operations this year”. His remarks echo the recent Federal Open Market Committee minutes.
The New York Fed’s open market desk has been conducting daily
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