Fed’s repo tapering plans hit snag

The Federal Reserve’s plan to reduce its repo footprint may have hit a snag, as its first operation with a reduced amount on offer was significantly oversubscribed on February 4.

Banks demanded $59 billion, almost double the $30 billion on offer in the 14-day term repo. Rate strategists suggest the surge in demand was likely down to a change in the price of the operations and not a resurgence of funding pressures.

The oversubscribed operation follows the central bank’s announcement last week

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