Fed Halts Reserve-Management T-Bill Purchases for Second Straight Month

The Federal Reserve has decided to halt its reserve-management short-term Treasury purchases for a second straight month, citing that bank reserves in the system are ample. This decision reflects the Fed's view that short-term funding markets are functioning smoothly, with the Secured Overnight Financing Rate (SOFR) remaining at or below the interest rate on reserve balances (IORB) for most of the past month.

The New York Fed's Open Market Trading Desk does not plan to conduct reserve-management purchases through October 14. During this period, they will still buy about $15.6 billion of Treasuries to reinvest proceeds from maturing holdings.

Bank reserves have remained stable, with a current level of $3.04 trillion, up from $2.85 trillion at the end of last year and above this year's average of $3.01 trillion.