BlockBeats report: On September 15, the Federal Reserve stated that it will refrain from conducting U.S. Treasury purchases for reserve management purposes for the second consecutive month, indicating that policymakers believe current levels of bank reserves in the financial system are appropriate. The New York Fed’s Open Market Trading Desk plans to hold off on reserve management purchases during the monthly cycle ending October 14. However, the desk still intends to conduct approximately $15.6 billion in reinvestment purchases during the same period. The Fed’s decision to pause reserve management purchases reflects its confidence in the functioning of money markets, a sentiment also evident in the Secured Overnight Financing Rate (SOFR), which has remained near or below the Interest on Reserve Balances (IORB) rate for most of the past month.
At the same time, the U.S. Treasury reduced its issuance of Treasury securities ahead of the quarterly tax payment deadline. This change does not signify a shift in the Federal Reserve’s monetary policy or balance sheet strategy. (Note: "Reserve Management Purchases" are primarily used to adjust reserve levels in the banking system and are not equivalent to traditional quantitative easing. The Fed continues to reinvest in MBS, which remains part of balance sheet management.) (CoinDesk)