Demand for Fed Overnight Repo Program Hits Record $1.7 Trillion

This article notes that the overnight reverse repo program hit a new high–on Friday evening the Fed soaked up $1.7 trillion in liquidity. What the article does not emphasize is how incredibly abnormal this is. Some interpret these actions as a policy response to unwanted federal government debt…the Fed must conduct these overnight reverse repos at such a magnitude to hold together (with duct tape) the unsustainable federal debt situation. Regardless, these actions are a reflection of the fact that things are not “normal” in the monetary/financial markets.

Why hawkish Fed moves to calm inflation aren’t likely to cause a sudden drain of liquidity from markets – MarketWatch

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

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