Roberto Perli, a senior official at the New York Federal Reserve, stated that the central bank will continue to evaluate reserve levels, noting that its purchases of US Treasury bills are not following a pre-set trajectory. Earlier this year, the Federal Open Market Committee (FOMC) authorized the New York Fed's market operations desk to autonomously calibrate the scale of reserve management purchases.
During prepared remarks delivered at a New York event on Tuesday, Perli indicated that these purchases, which currently stand at zero, have been adjusted in response to "evolving conditions." "We stand ready to adjust the pace of our purchases again in the future to implement the FOMC's policy of keeping reserves in ample supply," he said, adding that the New York Fed will monitor assessments of market conditions from senior financial officers, alongside other signals of strain in funding markets.
"If, as observers expect, there is another significant net issuance of Treasury bills in October, we will be watching how the market reacts to that," Perli remarked. Earlier this month, officials announced they would hold off on buying US Treasury bills for reserve management purposes until mid-October, effectively extending the pause that began in August. The New York Fed noted at the time, however, that it still planned to execute roughly $15.6 billion in reinvestment purchases.
On Tuesday, Perli also highlighted the advantages of central clearing for repurchase agreements. "If operations rely more heavily on repo, these benefits will become even more significant, because it will strengthen the ability of counterparties to act as liquidity intermediaries across the system," he explained.
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