By Owain Johnson
The U.S. Federal Reserve plans to gradually reduce its “repo operations” over the next few months in response to calmer prevailing market conditions. The cash infusions have been the major supplier of liquidity to the U.S. repo markets.
The Fed announced in mid-February that it would reduce the size of its term operations by $5 billion to $25 billion by the end of February, and by $5 billion to $20 billion from March onwards before potentially winding down the current program altogether.
“The Desk would continue the gradual reduction and consolidation of