Federal Reserve Open Board Meeting
Federal Reserve liquidity injection has stunned markets. The Fed quietly pumped $29.4 billion into the U.S. banking system through overnight repurchase agreements (repos) on October 31, 2025, marking its largest liquidity boost in more than five years. Official FRED data confirms it. The operation, listed as RPONTSYD, shows the central bank is moving fast to ease tightening funding conditions. It’s the first major liquidity push of this scale since early 2020, the pandemic-era rescue phase.
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This injection signals deepening strain in short-term funding markets. U.S. bank reserves have plunged to around $2.8 trillion, their lowest level in over four years. The decline reached nearly $102 billion in recent weeks, the sharpest fall since 2020. Analysts say the move shows the system is under pressure as quantitative tightening and Treasury issuance drain liquidity. The Fed’s balance sheet has already fallen to about $6.58 trillion, down from its 2022 peak near $9 trillion.
Despite Chair Jerome Powell’s hawkish tone in recent speeches, this action contradicts the idea of continued tightening. The Fed is quietly stabilizing the system while talking tough on inflation. It’s a tactical move — easing stress without officially shifting policy. This kind of repo operation allows banks to swap Treasuries for cash overnight, adding short-term liquidity that keeps the funding market from freezing.
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