Group 1 - The Federal Reserve's balance sheet reduction is putting pressure on the repurchase agreement market, indicating that tools for controlling short-term interest rates will become increasingly important [1] - As of May 14, the Federal Reserve's balance sheet stood at $3.24 trillion, slightly above the previous week and close to the level when quantitative tightening (QT) began nearly three years ago [2] - The Federal Reserve needs to maintain its balance sheet above $3 trillion to ensure sufficient liquidity and avoid market pressure [2] Group 2 - The Standing Repo Facility (SRF) helps reduce the reserve requirements needed for the central bank to operate effectively under the "ample reserves framework" [3] - The New York Fed plans to incorporate SRF's early settlement operations into its regular schedule to support market stability [3] - There are obstacles that hinder counterparties from using the SRF, including issues with netting transactions and uncertainty in allocation, which increase the cost of using the tool [3]