The Federal Reserve absorbed $4.736 billion in its latest overnight reverse repo operation, a negligible amount compared to the $2.5 trillion absorbed in late 2022. This figure represents roughly 0.2% of the historical peak. The decline reflects the Fed’s success in its quantitative tightening program, which has gradually drained excess liquidity accumulated during the pandemic era. With balances now nearly exhausted, the Fed has less room to continue shrinking its balance sheet without creating stress in funding markets.
Source: Read the original article
