The New York Fed on Thursday announced that for the month from Friday (August 14) to September 14, it will not conduct any Treasury security purchases under the Reserve Management Purchases (RMP) program, the first pause since the so-called “non-QE asset purchase” program was relaunched on December 12 last year.
While it is the Federal Reserve’s stated policy to change the monthly size of RMP “to accommodate seasonal fluctuations in demand for Federal Reserve liabilities… as well as trend growth in demand over longer horizons,” and while the primary task of RMP was to smooth out the sharp drop in reserves around the April tax payment date, new Fed chair Kevin Warsh has always emphasized his preference for a leaner Fed balance sheet.
RMP, through the purchases of Treasury Bills and other short-term Treasurys with remaining maturity shorter than three years, has helped the Fed expand its reserve supply from USD 2,974 billion on Dec 10 to USD 3,003 billion on Aug 5, a very mild increase.
The New York Fed has made a cumulated USD 338.4 billion in asset purchases so far in the eight months since the restart of the RMP.
