Federal Reserve Maintains Ample Reserves with Paused Purchases

The Federal Reserve Bank of New York's Manager of the System Open Market Account, Roberto Perli, spoke at the 2026 U.S. Treasury Market Conference about maintaining ample reserves in the financial system.

Perli explained that the Desk's approach to supplying reserves is informed by three key considerations: reserve demand, forecast for reserve supply, and current money market conditions.

The recent decision to pause Reserve Management Purchases (RMPs) was due to a shift in the estimate of reserve supply following Treasury's guidance on the end-of-December level of the Treasury General Account. This led to a reduced risk that reserves might fall below ample levels later in the forecast horizon.

Perli noted that money market rates, including the effective federal funds rate and Treasury repo rates, continued to trade close to the interest rate on reserve balances (IORB). This suggests that reserves were likely in the higher part of the ample range. Other indicators also confirmed that reserves were ample and likely to remain so in the near term.

The Federal Reserve's approach to supplying reserves is compared to those adopted by other central banks, such as the Bank of England and the European Central Bank. While these central banks supply marginal reserves through repo operations, the Fed has been doing so primarily through asset purchases.