The Federal Reserve is extending its repurchase agreement (repo) operations through at least January of 2020 to ensure reserve supplies are enough to mitigate risk of money market pressures.
"These actions are purely technical measures to support the effective implementation of the FOMC's monetary policy, and do not represent a change in the stance of monetary policy", according to the Fed's statement.
Markets for the most part agreed. -China trade deal could be a "positive development" for the USA economy, Dallas Federal Reserve Bank President Robert Kaplan said on Friday but repeated that he'll remain open-minded and watching data closely in the run-up to the Fed's October 29-30 policy meeting.
Kaplan also responded to questions about the Fed's new program to buy Treasury bills, announced earlier in the day to address strains in overnight funding markets.
The program is in response to recent disruptions in short- term money markets that pushed the target federal funds rate to the top of its target range.
The Fed will initially aim to bring reserves to about $1.5 trillion, the level seen in early September, before a liquidity crunch led to a spike in short-term rates. Principal payments from agency debt and agency mortgage-backed securities up to $20 billion per month will continue to be reinvested in Treasury securities to roughly match the maturity composition of Treasury securities outstanding; principal payments in excess of $20 billion per month will continue to be reinvested in agency mortgage-backed securities.
A man walks past the Federal Reserve Bank in Washington, December 16, 2015.