If the repurchase agreement rate returns to the top of the target range for the effective federal funds rate, or just the upper edge, and persists for several more weeks, policymakers may need to make adjustments, Barclays strategist Samuel Earl said in a note.
The repo market is a "significant driver" of the direction of the federal funds rate, Earl wrote, and officials need to worry about the repo rate persisting at or above the upper end of the range, meaning the Fed will eventually need to increase reserves through more repo lending or outright purchases of treasury securities.
Barclays: If repo rates remain high, the Federal Reserve may need to intervene
2025-11-05 16:46:16
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