The Federal Reserve lent more than $11 billion to banks overnight on June 30 through its daily standing repo facility, the most since it introduced the routine overnight lending program in 2021, according to a Dow Jones article on Morningstar.
Conditions created by a smaller Fed balance sheet, combined with financial institutions’ routine quarter-end cash-management operations, were likely responsible for the new high.
Officials at the New York Fed, which manages the Federal Reserve’s presence in financial markets, have encouraged banks to use the SRF when needed in recent months as repo markets show signs of tightening. The Fed added a second daily financing auction, in the morning, to make the option more user friendly.
On June 30, the month- and quarter-end, users borrowed just over $5 billion from the Fed in the morning and $6 billion in the afternoon round, according to the New York Fed.