Fed's QT and Liquidity Management

The Federal Reserve's quantitative tightening (QT) may end sooner than anticipated, possibly by the end of Q1 2025, due to banks' preference for reserves over other liquidity sources.
The Fed's standing repo facility, designed to supply reserves, is less effective than the Bank of England's due to stigma, operational limitations (impact on dealers' balance sheets), and timing issues.
Recent enhancements to the facility, like additional morning operations, aim to address short-term volatility in repo rates but don't solve the underlying issues hindering QT.
To extend QT, the Fed needs to make the standing repo facility more appealing by reducing stigma and improving operational efficiency, similar to the Bank of England's approach.

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