New York Fed Doubles Reverse Repo Counterparty Limit to $160b, Banks Immediately Respond By Parking $135.2b At The Fed

This will make Fed Chair Powell smile along with Treasury Secretary Janet Yellen!

(Bloomberg) — The Federal Open Market Committee directed the New York Fed’s Desk to increase the size of the counterparty limit for the overnight reverse repo facility, according to a statement.

Per-counterparty limit increased to $160b/day from $80b/day, with the change taking effect Sept. 23

“The increase in the per-counterparty limit from the current level of $80 billion per day helps ensure that the ON RRP facility continues to support effective policy implementation,” according to statement. “All other ON RRP operation parameters remain the same”

And banks didn’t wait long to park $135.2b overnight at The Fed.

When combined with the ongoing expansion of the Fed’s balance sheet, we are seeing to see the expansion of the United States on Liquidity.

The Fed is providing a sea of liquidity. What are the banks afraid of?

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