The Fed’s rate freeze will mean nothing unless banks fix a repo market bottleneck

The Federal Reserve held its rate target range at 3.75%-4% on Oct. 28, with operating instructions effective the following day setting out how to implement that stance across bank reserves and overnight funding markets. The Federal Open Market Committee's October decision passed 10-2, with Lisa D. Cook and Beth M. Hammack dissenting and preferring a quarter-percentage-point increase. The Oct. 29 accompanying implementation note maintains interest on reserve balances (IORB) at 3.9%, with standing overnight repo at 4% and reverse repo offered at 3.75%.