May 4, 2023
The Federal Reserve (Fed) has decided to implement the monetary policy stance announced by the Federal Open Market Committee (FOMC) in its statement on May 3, 2023.
Effective May 4, 2023, the interest rate paid on reserve balances will increase to 5.15%, the primary credit rate will increase by a quarter percentage point to 5.25% and the Open Market Desk at the Federal Reserve Bank of New York will be directed by FOMC to execute transactions in the System Open Market Account that are necessary to maintain the Fed funds rate in a target range of 5% to 5.25%.
Additionally, the Desk will conduct standing overnight repurchase agreement operations with a minimum bid rate of 5.25% and an aggregate operation limit of $500 billion, and conduct standing overnight reverse repurchase agreement operations at an offering rate of 5.05% and with a per-counterparty limit of $160 billion per day.
The Desk will also engage in dollar roll and coupon swap transactions, reinvest principal payments received from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities (MBS) received monthly that exceed a cap of $35 billion per month into agency MBS (small variations from stated amounts will be facilitated where necessary for operational reasons), and roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month in excess of a cap of $60 billion monthly.
Analyst Certification – The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view (s) expressed by that research analyst in this research report.
Company Disclosure – The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may affect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.