The Federal Reserve retained reserve remuneration and overnight facility rates in its October implementation instructions, effective October 29. The New York trading desk can purchase short-dated US Treasury securities to maintain ample reserves and will reinvest principal payments. These operational terms accompany the unchanged 3.75–4% policy range, specifying how the central bank will carry out its decision.
The Federal Reserve, the US central bank, left its federal funds target range unchanged at its October 28 meeting. Its implementation directive instructs the New York Fed trading desk to keep the rate within 3.75–4%. The instructions take effect on October 29 and apply until the committee directs otherwise.[1], [2]
The Board of Governors unanimously maintained interest paid on reserve balances at 3.90% and approved the existing primary credit rate of 4%. Standing overnight repurchase operations retain a 4% rate. Overnight reverse repurchase operations carry a 3.75% offering rate, with a limit of 160 billion dollars per counterparty each day. These are the operational terms accompanying the unchanged policy range.[1]
To maintain ample reserves, the desk may purchase Treasury bills when appropriate and, if needed, other Treasury securities with remaining maturities of 3 years or less. It will roll over all principal payments from Treasury holdings at auction. Principal received from agency securities will be reinvested in Treasury bills. The directive therefore sets both overnight transaction terms and the handling of securities proceeds.[1]
