March 29, 2023 20:25 GMT
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.
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