It is believed that the Fed have been speaking with Primary Dealers about restarting Reverse-Repo operations soon. They stopped operations in Dec. 2008 after the last rate cut. It’s worth noting that pre-crisis (before Sept. 15, 2008), the typical Fed repo operation was between $2b and $10b. Dealers believe it may be the potential size of the upcoming operations that is the reason for the meetings and the Fed’s statement released today. To date the Fed’s balance sheet has grown over $1 trillion since 2008!
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