MNI BRIEF: Fed Wants Banks To Use Repo Backstop - Hammack

Federal Reserve Bank of Cleveland President Beth Hammack on Thursday encouraged banks to further take advantage of the central bank's standing repo facility backstop when funding pressures are high. 

"I was pleased to see the take up in the standing repo facility," she told the Economic Club of New York. "I'm surprised there wasn't more take-up given where rates were trading. I expect that the banks are getting used to it and starting to recognize that in fact we do want them to take advantage of this tool." 

Having the standing repo facility allows the Fed to maintain a smaller balance sheet over the longer term and reduce its footprint in the market, she added. The Fed last week announced an end to its QT program as of December as bank reserves have fallen quickly in recent weeks. The standing repo facility recorded its highest level of usage since its launch in 2021 last week, lending USD50 billion on Friday. (See: MNI INTERVIEW: Fed Soon To End QT On Funding Strains - Wright)