A key facility the Federal Reserve uses to help control short-term interest rates saw record inflows on Friday, the final trading day of the year.
took in $2.554 trillion in cash from money market funds and other eligible financial firms, besting the prior high water mark seen on Sept. 30, when inflows totaled $2.426 trillion. The cash surge was almost certainly tipped into record territory on a typical quarter end pattern which can be further exacerbated on the year end.
On those dates, for a variety of reasons, many financial firms prefer to park cash at the central bank rather than in private markets. The Fed’s reverse repo facility has been very active for some time. After seeing almost no uptake for an extended period, cash began to gravitate toward the central bank in the spring of 2021 and then grew consistently.The reverse repo facility takes in cash from eligible financial firms in what is a de facto loan from the Fed. The current rate stands at 4.3%, which is a return that often bests private sector short-term lending rates. The reverse repo facility is designed to provide a soft floor for short-term rates and the federal funds target rate, the Fed's main tool to achieve its job and inflation mandates. To set the high end of the range, the Fed also pays deposit taking banks to park cash at the central bank, with itsThe federal funds rate is currently set at between 4.25% and 4.5% and traded at 4.33% as of Friday, bound between the reverse repo and interest on reserve balances rates.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
NYC mayor lauds federal directive to close federal ‘ghost gun loophole’The ATF is telling gun dealers to run background checks and make serial numbers for partially built guns.
Read more »
Call Of The Wild: The Angler Adds Norway Reserve & Legends UpdateICYMI: Expansive Worlds, a creative division within Avalanche Studios Group, has given CallOfTheWild: The Angler some new DLC content. indiedev indiegame
Read more »
Texas executives have a gloomy outlook for 2023New surveys from the Federal Reserve Bank of Dallas find that executives in the state's...
Read more »
Texas executives in retail, manufacturing and service preparing for a slowdown in 2023Executives in the service, manufacturing and retail sectors in Texas are girding for a downturn next year even as business remains relatively healthy as 2022 draws to a close.
Read more »
Retiring Fed President Challenged the Consensus Inside Central BankThe Fed is set to lose one of its more diligent skeptics when Esther George retires next month
Read more »
Stock, Bond and Crypto Investors Remain on Edge After Brutal Year for MarketsThis year was a bust for the stock, bond and crypto markets. The debate on the outlook for 2023 is already under way.
Read more »