(Reuters) -New York Federal Reserve President John Williams met with Wall Street banks this week to discuss a key short-term lending facility, the Financial Times reported on Friday, amid signs of tighter market liquidity.

"President Williams convened the New York Fed's primary trading counterparties (primary dealers) to continue engagement on the purpose of the standing repo facility as a tool of monetary policy implementation and to solicit feedback that ensures it remains effective for rate control," a New York Fed spokesperson told the newspaper.

The New York Fed did not immediately respond to Reuters request for comment.

The meeting took place on the sidelines of the Fed's annual Treasury market conference on Wednesday, the FT said.

Roberto Perli, the official responsible for implementing monetary policy, said on Wednesday that firms needing to use the central bank's standing repo facility should tap it when needed, adding that large-scale usage would not be problematic.

Ahead of the Fed's meeting in October, rising money market rates, an upward drift of the federal funds rate and use of the SRF all signaled tightening market liquidity.

The SRF allows eligible financial firms to turn bonds into cash quickly and acts as a shock absorber for market liquidity needs. Adopted in 2021, the tool had until late mostly gone unused.

While its use in late October was notable, it was less than some had expected, and some Fed officials have said they were perplexed that more firms did not tap the SRF but instead borrowed from markets at higher rates than those offered by the Fed.