MNI BRIEF: Fed's Standing Repo Facility Not Worked Well- Miran

The Federal Reserve's standing repo facility hasn't performed up to expectations to cap money market rate pressures, Fed Governor Stephen Miran said Monday. 

"It's a ceiling tool that hasn't really functioned as a ceiling tool, and there's a variety of diagnoses about what, why that's the case, and what steps would you want to take, if any, to fix it," he said at a Columbia University talk, noting over a trillion dollars in volume transacted in the SOFR market at month-end November at rates above the Fed's interest rate paid on reserve balances. "It's an ongoing conversation," he said. 

Miran also said the Fed's reserve management purchases of USD40 billion in Treasury bills this month is not QE because the central bank is simply swapping one short-term obligation with another to create reserves. "Not only are the RMPs not QE, but the tightening effects of QT are still happening, even though we ended balance sheet runoff," because mortgage securities continue to run off the balance sheet, he said.