Fed's Balance Sheet Reduction on Track

Roberto Perli of the New York Federal Reserve has reported that the reduction of the Fed's balance sheet is proceeding without a hitch. Financial system reserves remain robust, indicating a healthy adjustment process. Perli also highlighted the expected continued decrease in reverse repurchase agreements.

Repo Market Stabilization and Future Strategies

Signs of stabilization in the repo market were noted by Perli, alongside the challenges of managing balance sheet reductions during the debt ceiling discussions. To bolster market liquidity, the Fed is considering reinstating early morning Standing Repo Facility (SRF) operations at each quarter's end.