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Here's What The Fed's IOER and Reverse Repo Rate Hikes Means

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by Tyler Durden
Wednesday, Jun 16, 2021 - 03:43 PM

There were no major changes in Fed policy - the fed funds target range and QE purchases did not change - although one can argue that the taper narrative did change, and as we predicted it would, it is now a bullish catalyst of sentiment... after all, with $520BN in excess liquidity parked at the Fed reverse repo facility, something is clearly broken.

That said, there were two tangible, if less noted changes: the Fed adjusted two "technical" or "administered" rates, raising both the IOER and RRP rates by 5 basis points (as correctly predicted by Bank of America, JPMorgan, Wrightson, Deutsche Bank and Wells Fargo while Citi, Oxford Economics, Jefferies, Credit Suisse, Standard Chartered, BMO were wrong in predicting no rate change).