Central Bank Liquidity Management

The Bank of England (BOE) is transitioning to a demand-driven reserve framework, using repo facilities as the primary liquidity provision mechanism.
This shift involves recalibrating the existing long-term repo facility and utilizing the short-term repo facility.
The BOE aims to use these facilities as a stopgap to maintain reserve levels and ensure stability amid quantitative tightening (QT).
Similarly, the Federal Reserve (Fed) lowered its overnight RRP rate to manage liquidity and support ongoing QT.
The Fed's aim is to prevent increased usage of the reverse repo facility and continue draining it, though complete drainage is unlikely due to sticky balances from prime money market funds.

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