Fed Ending Term Repos Reflects Liquidity Feast for Dealers
- Last regularly scheduled offerings will take place in February
- New concern for the central bank is rates dropping too low
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The Federal Reserve’s decision to discontinue its regularly scheduled term repos reflects a financial system that is now awash in liquidity.
The New York Fed said its one-month term repos set for Feb. 2 and Feb. 9 will be the last regularly scheduled operations, according to a statement, citing the “sustained smooth functioning” of short-term U.S. dollar funding markets. Primary dealers last submitted bids to the offering in June. Overnight repo operations will continue.