Fed Extends Pause on Reserve Management Purchases Until October

The Federal Reserve (Fed) has decided to extend its pause on reserve management purchases for another month, until October. This means that the New York Fed's open markets desk won't buy treasury bills for reserve management purposes during this time.

The decision is seen as an indication that policymakers are comfortable with the level of bank reserves in the financial system. The Fed has been buying short-term Treasuries to ease pressures building in short-term rates and ensure there were enough reserves through the April tax season.

Bank reserves stood at $3.04 trillion as of September 9, up from $2.85 trillion at the end of last year and above the year-to-date average of $3.01 trillion. The Fed abruptly stopped shrinking its balance sheet at the end of 2025 and began adding reserves back into the financial system by buying short-term Treasuries.

Funding conditions have been soft across the board during the past month, with cash overwhelming available collateral. Money-market fund assets have reached all-time highs, helping keep money market rates anchored even as the Treasury Department has been flooding the market with bill issuance.