Fed’s Perli says Treasury bill purchases will adapt to evolving market conditions

Federal Reserve's Roberto Perli, Manager of the System Open Market Account (SOMA) at the Federal Reserve Bank of New York, revealed at the 2026 U.S. Treasury Market Conference in New York that the central bank has taken a flexible approach to its reserve management operations. Currently, the Reserve Management Purchases (RMPs) are paused, but the Fed remains open to future Treasury bill purchases.

The Reserve Management Trading Desk has kept RMPs at zero since mid-August, attributing the decision to an unexpectedly high supply of reserves, influenced by new Treasury General Account guidance and stable money market conditions. Overnight money market rates have remained slightly below the interest rate on reserve balances, indicating that bank reserves are at the upper limit of the Fed's target range.

Despite absorbing roughly $400 billion in net bill issuance from July and August with minimal upward pressure on repo rates, the market demonstrated resilience during heavy Treasury issuance. The Financial Services Desk is monitoring for an anticipated surge in net bill issuance in October, observing repository data and the Senior Financial Officer Survey to determine any shifts in bank reserve demand.

Perli emphasized the Fed's readiness to resume or modify purchases if repo market pressures reappear to maintain reserves within the ample range. The Fed's approach to liquidity supply differs structurally from that of international peers, such as the European Central Bank and the Bank of England, who depend more heavily on routine repo operations, often resulting in a smaller balance sheet and shorter duration.