Fed cuts size of O/N repo ops and plans smaller term OPS
The Fed has announced that they will keep the monthly pace of T-bill reserve management purchases at US$60 billion. However, the will cut the overnight repo operations to $100 billion (was 120 billion previously).
They also announced that they would cut the Tuesday and Thursday term repos to $25 billion from $30 billion previously for February and trim that amount to $20 billion for March.
The Fed has been growing the balance sheet to provide enough liquidity to the system. Some are speculating that liquidity has been plowing into stocks. Chair Powell said that the Fed stands ready to adjust the operations as conditions warrant. Last month Powell said that the Fed would continue term and overnight repo operations at least through April
The announced small trimming has helped to push stocks back into the negative. The NASDAQ index is currently down -2.9 points or -0.3% at 9723. The index was trading around and 9739 before the announcement.
