Federal Reserve Statement on Reverse Repo
October 19th, 2009 11:00 am | by John Jansen |The Federal Reserve Bank of NY has issued a statement to quell speculation about reverse repos. As I mentioned earlier the market was rife with rumors on Friday regarding the topic.
The Open Market Desk is in an exploratory mode and is busy doing preparatory work for the time when reverse repos are a monetary policy necessity.
The money sentence in the statement is the following:
“This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening.”
I think this is part of the Fed’s attempt to be transparent regarding their Open Market Operations.
Parenthetically, this is the 22nd anniversary of the October 19 1987 one day 22 percent correction in the Dow Jones.
The following morning as the system began to feel as though somebody had tossed a couple of buckets of sand into the gears the Federal Reserve issued a statement which said that it stood ready to provide all the liquidity that the system required.
And the Greenspan put was conceived.
7 Responses to “Federal Reserve Statement on Reverse Repo”
By Bman on Oct 19, 2009 | Reply
…”And the Greenspan put was conceived.” – and the equity market pops again as they latch back on to the nipple.
By sean on Oct 19, 2009 | Reply
I think they are trying to control asset price inflation by keeping the fear of potentially very quick large rate hikes in the minds of speculators, while actually keeping rates low to fight unemployment…just my thought. Hence they let rumors such as these blow for a day to put some fear in the market.s
By Bman on Oct 19, 2009 | Reply
I’ll believe it when I see it – I think some of these statements are also along the same lines as you mentioned – only to psuedo-stabilize the dollar, without actually having to do it.
By John Jansen on Oct 19, 2009 | Reply
Nice graphic image tastefully done
By Al on Oct 19, 2009 | Reply
look at what they do, not at what they say, right?
Federal Reserve MBS Purchase Program – $941B of 1.25T. so there’s $309B of fresh and crispy paper left. courtesy of Bubblenanke.
poor poor USD. watch for 72 on $DXY, regardless of what those imbeciles say
By franko on Oct 19, 2009 | Reply
ehhh – anyone care to comment on idea that the Fed would be doing reverse repos w non-treasuries now that the fed balance sheet has considerable mbs?? hmmm? or is this a blind alley of an idea?
By 123 on Oct 19, 2009 | Reply
…The Federal Reserve Bank of NY …
of all places.