US Bank Reserve Requirement Decreases, Providing Basis for Fed to End QT
BlockBeats News, October 24th, the reserve balances of banks in the United States are a key factor in the Federal Reserve's decision to continue tapering its balance sheet. According to data released by the Fed on Thursday, in the week ending October 22nd, reserve balances at banks fell by about $59 billion to $2.93 trillion. This is the lowest level since the week of January 1st. The U.S. Treasury has ramped up debt issuance efforts since the July debt ceiling increase to rebuild its cash balance, drawing liquidity away from other liabilities on the Fed's balance sheet, such as the Fed's overnight reverse repo facility and bank reserves. Now, with the so-called ON-RRP (overnight reverse repo) facility nearly depleted, commercial bank reserves held at the Fed have been declining. Strategists from JPMorgan Chase, Bank of America, as well as Credit Suisse and Wrightson, all expect the Fed to stop reducing its roughly $6.6 trillion balance sheet this month. (FXStreet)
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