Fed’s repo tapering plans hit snag

Banks demand double what was on offer at Fed’s first reduced repo offering

US Federal Reserve

The Federal Reserve’s plan to reduce its repo footprint may have hit a snag, as its first operation with a reduced amount on offer was significantly oversubscribed on February 4.

Banks demanded $59 billion, almost double the $30 billion on offer in the 14-day term repo. Rate strategists suggest the surge in demand was likely down to a change in the price of the operations and not a resurgence of funding pressures.

The oversubscribed operation follows the central bank’s announcement last week

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