The minutes of the Federal Reserve meeting showed that short-term funding markets tightened and reserves approached ample levels.
TL;DR
Fed minutes show US short-term funding markets tightened but orderly, with reserve balances nearing ample levels as key rate spreads narrowed and facility usage shifted.
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According to ChainCatcher, citing Jinshi, the minutes of the Federal Reserve's October meeting showed that short-term funding market conditions in the United States tightened significantly during the break, but remained orderly. Towards the end of the break, the spread between the effective federal funds rate and the reserve balance rate narrowed to its narrowest level since the Fed began its balance sheet reduction in 2022. The guaranteed overnight funding rate repeatedly fell below the minimum bid rate of the Standing Repo Facility, leading to frequent use of this tool. The average usage of the overnight reverse repo facility fell to its lowest level since 2021. These changes indicate that reserve balances are gradually approaching ample levels.