Core Viewpoint - The Federal Reserve Bank of New York encourages firms to utilize the Standing Repo Facility (SRF) as needed, indicating that large-scale usage is acceptable and expected [1][2]. Group 1: SRF Usage and Economic Context - The SRF is designed to be used whenever it is economically sensible, allowing eligible financial firms to convert bonds into cash quickly to address market liquidity needs [2][5]. - Recent trends show rising money market rates and increased usage of the SRF, signaling tightening market liquidity levels [5][6]. - Despite notable usage in late October, it was less than anticipated, with some firms opting to borrow from markets at higher rates instead of utilizing the SRF [6]. Group 2: Market Dynamics and Future Expectations - The Federal Reserve has been reducing its bond holdings since 2022 to manage market liquidity and maintain control over the federal funds rate [4]. - As Wall Street becomes more familiar with the SRF, its usage is expected to increase, particularly if repo pressures persist or intensify, which would help alleviate upward rate pressure [7].

Monetary Policy - The essay "Hallelujah" discusses how the Fed's Standing Repo Facility will lead to stealth Quantitative Easing (QE) [1]

Monetary Policy - The Federal Reserve's Standing Repo Facility (SRF) is characterized as a new "stealth money printing vehicle" [1] - When money market conditions tighten (SOFR exceeds the Fed Funds rate), the Fed increases liquidity by lending through the SRF [1]

By Michael S. Derby (Reuters) -Federal Reserve Chair Jerome Powell said on Tuesday the end of the central bank’s long-running effort to shrink the size of its holdings, widely known as quantitative tightening, or QT, may be coming into view. Given the central bank’s long-running goal of leaving enough liquidity in the financial system to allow for firm control of short-term rates and normal money market volatility, Powell said “we may approach that point in coming months, and we are closely monitoring a ...