The Fed considers the overnight reverse repo rate back to the base rate floor

Staff also briefed the committee on two considerations for balance sheet management in the near term, according to Federal Reserve meeting notes. The first consideration focused on the possibility of a technical adjustment to the overnight reverse repurchase agreement offering rate, and staff reviewed developments in the use of the overnight reverse repurchase agreement tool. < b > Staff noted that a five basis point reduction in the overnight reverse repurchase agreement offering rate would bring the rate in line with the lower bound of the federal funds rate target range and could put some downward pressure on other money market rates. The second consideration focused on the possible impact of a possible restoration of the federal debt limit in 2025 on the Federal Reserve's liabilities. Staff pointed out that these significant changes could mask the impact of continued balance sheet erosion on money market conditions and pose challenges in assessing reserve positions.