The Federal Reserve's meeting minutes indicate that the short-term funding market is tightening, with reserves approaching ample levels

According to Jin Shi reports, the minutes of the Federal Reserve's October meeting show that conditions in the U.S. short-term funding market tightened significantly during the intermission period, but remained orderly. As the intermission period approached its end, the difference between the effective federal funds rate and the reserve balance rate narrowed to the lowest level since the Fed began tapering in 2022. The secured overnight financing rate repeatedly exceeded the minimum bid rate for the standing repo facility, leading to multiple activations of this tool. The average usage of the overnight reverse repo tool has dropped to the lowest level since 2021, indicating that reserve balances are gradually approaching ample levels.