Summary:
June was supposed to be the month the Federal Reserve began reducing its balance sheet by allowing its assets to roll off faster than they are replaced. But the Fed’ balance sheet stands at a record high, as does currency in circulation as excess reserves continue to decrease.
At the same time, money parked at its reverse repo facility has increased significantly in June, which has a tightening effect. So, is the Fed tightening or loosening and does it even know?
Additional Reading
https://www.federalreserve.gov/releases/h41/current/h41.htm (Federal Reserve Balance Sheet as of June 30, 2022)
https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm (Federal Reserve Recent Balance Sheet Trends)
https://fred.stlouisfed.org/series/CURRCIR (Currency in Circulation)
https://fred.stlouisfed.org/series/RRPONTSYD/ (Overnight Reverse Repurchase Agreements: Treasury Securities Sold by the Federal Reserve in the Temporary Open Market Operations)
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