financetom
Economy
financetom
/
Economy
/
Fed's Perli encourages firms' use of Standing Repo Facility
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Fed's Perli encourages firms' use of Standing Repo Facility
May 26, 2025 12:52 PM

NEW YORK (Reuters) -A Federal Reserve Bank of New York official responsible for implementing monetary policy said on Thursday the central bank is encouraging usage of a key liquidity tool that thus far has been largely dormant.

When it comes to the Standing Repo Facility, or SRF, "I encourage our counterparties to use the SRF when it makes economic sense - the facility is there to support the effective implementation of monetary policy and smooth market functioning," said Roberto Perli, who manages the central bank's System Open Market Account, in the text of a speech prepared for delivery at a conference held by his bank. "It's in everyone's best interest if the SRF works as intended," Perli said.

The Fed's SRF was launched in 2021 and provides eligible firms with fast cash in exchange for Treasury securities, in a bid to bolster market liquidity and avoid unexpected shortfalls that can be hard for the central bank to counter expeditiously. Thus far, markets, still flush with liquidity, have largely left the SRF alone outside of the end of the third quarter last year, a short period of volatility.

Perli reiterated in his remarks that fairly soon the New York Fed will join its afternoon SRF operations with a morning availability.

"In the not-too distant future," the New York Fed "will start implementing daily morning SRF operations that will also be settled in the morning," Perli said. "This will be an important step in enhancing the efficacy of the facility, and, at the margin, it can contribute" to allowing the Fed's balance sheet to be smaller than it would otherwise be.

Perli is responsible for implementing monetary policy for the central bank, both in terms of the management of its short-term interest rate target and its massive holdings of cash and bonds. Perli noted in his remarks that the ongoing contraction of the Fed's balance sheet, which has seen the central bank shed just over $2 trillion in Treasury and mortgage bonds, likely has some ways to go, although there are signs of tightening money market liquidity.

As Fed holdings shrink and reserve levels move down, "upward pressure on money market rates is likely to increase," Perli said, adding "we are starting to see the early signs of this in the repo market, especially around key reporting dates."

This rise in repo market chop "is not a cause for concern," Perli said. But he also noted that it's likely to increase the need for markets to use the SRF to manage their liquidity needs.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
India looking into 'freak' incidents like damage to Sikkim's Chungthang dam: RK Singh
India looking into 'freak' incidents like damage to Sikkim's Chungthang dam: RK Singh
Oct 18, 2023
Stressing on the need to have quick ramp up and ramp down energy sources for grid balancing, the minister described hydroelectric power's role as essential in the path to energy transition as wind energy is intermittent and the sun doesn't shine 24×7.
JPMorgan has a new way to gauge its green progress
JPMorgan has a new way to gauge its green progress
Nov 15, 2023
As the largest energy banker, JPMorgan is a frequent target of criticism over Wall Street’s role in the climate crisis. At the same time, the bank is a leading US arranger of green bonds, making it vulnerable to Republicans seeking to protect the fossil fuel industry.
Zoomed Out | Critical Minerals — why India's current strategy to become self-reliant is so vital
Zoomed Out | Critical Minerals — why India's current strategy to become self-reliant is so vital
Nov 29, 2023
Internationally, there are genuine security concerns related to the criticality in building more diverse and dependable value chains for critical minerals, about their environmental and social sustainability, and technological challenges. While, India has taken the right steps for creating an ecosystem for accelerated exploration and production of critical and new age minerals, observes FICCI Mining Committee Co-Chair Pankaj Satija.
In fight to curb climate change, a grim report shows world is struggling to get on track
In fight to curb climate change, a grim report shows world is struggling to get on track
Nov 14, 2023
The State of Climate Action report released on Tuesday by the World Resources Institute, Climate Action Tracker, the Bezos Earth Fund and others looks at what's needed in several sectors of the global economy power, transportation, buildings, industry, finance and forestry to fit in a world that limits warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) over pre-industrial times, the goal the world adopted at Paris in 2015. The globe has already warmed about 1.2 degrees Celsius (2.2 degrees Fahrenheit) since the mid-19th century.
Copyright 2023-2025 - www.financetom.com All Rights Reserved