ASX:ING 6 December 2025

April 7, 2026, 1:51 AM EDT. The Federal Reserve employed two monetary policy tools during its 2022-23 tightening cycle: adjusting administrative rates and modifying its balance sheet size. A recent Staff Report analyzing confidential trade-level data reveals both tools significantly impact money market financing, specifically Treasury repurchase agreements (repo), which exceed $5 trillion in outstanding volume in early 2024. Treasury repo markets are critical for secured funding, with dealers intermediating between cash-rich entities like money market funds and leveraged clients such as hedge funds. The findings indicate the Fed can simultaneously loosen economic conditions by lowering rates while shrinking its balance sheet to stabilize financing conditions in money markets, providing nuanced control over liquidity and credit costs.