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MNI BRIEF: Clarida Questions Relevance Of Fed's Reverse Repos

(MNI) WASHINGTON

The Federal Reserve down the road needs to reconsider the longer-term goal of the overnight reverse repo facility that appears to no longer serve its original purpose and has seen trillions of dollars of usage on a regular basis, former Vice Chair Richard Clarida said Wednesday.

"As a steady state, where that facility is a trillion or two dollars, is [that] really the way the Fed wants to operate the financial system?" he said in Q&A at a NABE panel. The facility has seen usage above USD2 trillion on a regular basis since June.

The ex-Fed vice chair refrained from offering an answer but added the facility is no longer serving its original goal of preventing money-market rates from going negative when the fed funds rate is close to zero.

MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com

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