39 counterparties take $154.841 billion at the Fed reverse repo operation

39 counterparties take $154.841 billion at the Fed reverse repo operation

On May 24, 2025, the Federal Reserve's reverse repo operation saw 39 counterparties take $154.841 billion in funds. This activity underscores the continued importance of the Federal Reserve's liquidity facilities in maintaining stability in the money markets.

The reverse repo operation is a key tool in the Federal Reserve's monetary policy implementation framework, particularly under the ample reserves regime. This framework, adopted in January 2019, aims to maintain a sufficient supply of reserves to control short-term interest rates and ensure the smooth functioning of the financial system.

The Federal Reserve's ample reserves framework has proven robust to various economic and market conditions, including the onset of the COVID-19 pandemic and recent market volatility. The framework has enabled the Federal Reserve to maintain control over the federal funds rate, which has been outside the target range on only one day since its adoption [1].

As the Federal Reserve continues to reduce its balance sheet, the demand for its liquidity facilities is expected to increase. This is evidenced by the recent upward pressure on money market rates, particularly in the repo market. The Federal Reserve's Standing Repo Facility (SRF), introduced in 2021, is designed to dampen this upward pressure and support money market functioning.

The recent take-up of $154.841 billion in the reverse repo operation highlights the ongoing need for the Federal Reserve's liquidity facilities. As the economy and financial markets continue to evolve, the Federal Reserve's ability to adapt its tools and maintain stability will be crucial.

References:
[1] https://www.newyorkfed.org/newsevents/speeches/2025/per250522