The Fed Is Extending Overnight Funding Operations Through January 2020

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  • The Federal Reserve will be extending its temporary overnight repo operations through at least January.
  • In addition, the central bank said it will be buying short-duration Treasury bills through at least the second quarter of 2020.
  • Both announcements come as the Fed is looking to address issues in the short-term lending markets.

The Federal Reserve will be continuing its overnight funding operations through at least January and will buy Treasury bills through the second quarter of 2020, the central bank announced Friday.

Following a disruption in short-term lending markets in mid-September that sent interest rates soaring, the Fed began conducting its own operations to provide financial institutions with cash in exchange for ultra-safe assets like government bonds.

Most recently, the Fed said the repo operation would end Nov. 4.

The announcement comes as Chairman Jerome Powell also said that the Fed will be expanding the size of its $4 trillion balance sheet through further short-term T-bill purchases.

Fed officials met by video conference on Oct. 4 to discuss “issues related to the recent pressures in money markets and monetary policy implementation,” according to a news release.


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