Federal Reserve Logan: The Federal Reserve still has room to reduce excess reserves, and banks are expected to use SRF in September to ease liquidity pressures
2025-08-25 19:59:43
Dallas Fed President Logan said on Monday that the Fed still has room to reduce excess reserves and expects banks to use its Standing Repo Facility (SRF) next month to ease any liquidity pressures. "We may see some short-term pressure between tax day and the end of the quarter in September. I am pleased to see that markets used the SRF at the end of the June quarter and expect them to use our'cap facility 'in September as well if necessary." The facility is designed to prevent liquidity shortages, allow eligible institutions to quickly convert their holdings of U.S. Treasuries into cash and reduce the need for the Fed to step in in an emergency. With reserves in the banking system falling, Mr. Logan said the Fed and other central banks would do well to avoid expanding their balance sheets as banks' short-term demand for reserves rises, or risk "expanding" their balance sheets.
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