Roberto Perli, the manager of the Federal Reserve’s System Open Market Account, praised the resilience of markets in navigating the heavy stress experienced in April. In a speech prepared for a Federal Reserve conference, Perli highlighted the functioning of Treasury cash markets despite liquidity strain, attributing this in part to the robustness of funding liquidity in the Treasury repo market.
The stress period followed the announcement of significant trade tariffs on most of the world’s nations by the Trump administration. This situation underscored the necessity for the central bank to investigate ways to provide rapid liquidity to markets, according to Perli.
In response to input from the financial community, Perli revealed plans to make Standing Repo Facility ( SRF (NSE:SRFL)) operations accessible in both the morning and afternoon in the upcoming future. This move is expected to boost the effectiveness of the SRF as a tool for implementing monetary policy and ensuring market function. The SRF empowers eligible firms to swiftly convert Treasury securities into cash at the Federal Reserve, a process designed to address market liquidity needs.
The SRF has been largely inactive since its inception, with only one significant use last year and no considerable usage during last month’s market volatility. The Federal Reserve has provided early day SRF operations at quarter-ends in the past, and making this a regular feature aligns with market expectations.
Despite the market turmoil last month, the Federal Reserve refrained from intervening to support the markets.
