The Federal Reserve said it will suspend Treasury purchases aimed at managing
banking system reserves (RMP) for the next month, indicating reserves have
reached a level the Fed considers adequate. The New York Fed said RMP buys will
be paused for the operation cycle ending Sept. 14, while it will continue
roughly $17.0 billion of maturing-principal reinvestments. The Fed said the
adjustment is an operational change only and does not reflect a shift in
monetary policy stance or balance-sheet strategy. It noted that higher US
government cash balances could strain market liquidity but that funding markets
remain functioning. In July SOFR was below the IORB for most of the month; the
Aug. 12 SOFR fix was 3.62%, 3bp under the IORB.
