The day after the US Federal Reserve (Fed) announced another 3-yard rate hike on the 21st, the use of the Fed’s overnight reverse repurchase facility climbed to a record high on the 22nd, with about 102 participants investing a total of $2.359 trillion. funds. In the cryptocurrency market, Bitcoin climbed back above $19,000 after slumping to nearly $18,000 yesterday, while Ether climbed back above $1,300 after hitting a low of $1,220 yesterday. (Recap:Fed raises interest rates by 3 yards!Market tumbled, ETH plunged 13% at one point; Bloomberg: Bitcoin is at an extreme discount) (background supplement:Fed announces rate hike for September in U.S. Look at the previous FOMC Bitcoin is up or down?)
One day after the Federal Reserve announced yesterday that it would raise interest rates by another 3 yards and raise the target range of the federal funds rate to between 3% and 3.25%, data from the official website of the Federal Reserve Bank of New York said that money market funds and other institutions on the 22nd. A record $2.359 trillion was invested in the bank’s overnight reverse repurchase facility.
According to the Wall Street Journal, the last record inflow to overnight reverse repurchases occurred on June 30, when the volume reached $2.329 trillion. The surge occurs at the end of the quarter, when reverse repos are usually Mechanisms attract large sums of money due to temporary market factors.
The Fed’s overnight reverse repo facility, which takes in cash, mostly from money market funds, is designed to help set a floor on short-term interest rates. The rate on the tool is now at 3.05% after the Fed raised rates this week, up from 2.30% before the Fed hike.
The Fed also uses another tool, the Interest Rate on Reserves (IORB), to cap short-term interest rates, which is now 3.15%. Together, these two rates drive the market-based setting of the federal funds rate, which is The Fed’s main tool to achieve inflation, employment goals.
For some time now, the Fed has observed a surge in inflows into the overnight reverse repo facility, and while the facility was virtually inactive until April of last year, the influx of cash has continued since then, and since June this year Since the beginning of the month, the daily capital inflow has been above 2 trillion US dollars.
Market participants tied the huge use of reverse repos to a period when the Fed injected liquidity into the financial system by buying Treasuries, mortgage-backed securities (MBS), but the Fed is now reducing its holdings of those assets, Fed officials have argued that reverse repos will also shrink over time.
However, Fed officials are also aware that in the initial phase of the Fed’s rate hike, reverse repo facilities may attract more and more capital inflows, because the yield may be higher than private sales, and due to the recent turmoil in financial markets Uneasy, the reverse repo facility is also more attractive for cash deposits, as the safety and security of holding cash at the Fed is an enticing option for many fund managers.
Cryptocurrency Market Quotes
In the cryptocurrency market, Bitcoin (BTC) has now risen above $19,000 after the Federal Reserve raised interest rates and tumbled to nearly $18,000 yesterday. As of the time of writing, it was reported at $19,327, up 4.6% in the past 24 hours; Ether (ETH) rose to $1,331 after hitting a low of $1,220 yesterday, up 6.1% in the past 24 hours.
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