Fed Seen Expanding Use of Reverse Repo Facility by Shaw’s Sack

The Federal Reserve will make greater use of its reverse-repurchase agreement facility while policy makers shift focus to rate guidance from asset purchases, according to the central bank’s former markets group head.

“I would expect the Fed to increase the size of this facility, and even to get to full-allotment operations, over the course of this year,” Brian Sack, co-director of global economics at D.E. Shaw & Co., the $32 billion hedge fund, and former head of the Federal Reserve Bank of New York markets group, said during a telephone interview Jan. 31. “This would be a prudent step if this facility is going to be a key part of the Fed’s operating framework.”