Fed holds rates at 3.75%-4% as two officials push for a quarter-point rise

The Federal Reserve left its target range for the federal funds rate at 3.75%-4% on 28 October, but the decision was not unanimous: the Federal Open Market Committee voted 10-2, with Lisa D. Cook and Beth M. Hammack dissenting in favour of a quarter-percentage-point increase.

The accompanying implementation note, effective the following day, sets out how that stance is carried through the plumbing of overnight funding. Interest on reserve balances stays at 3.9%, standing overnight repo is offered at 4%, and the overnight reverse repo facility at 3.75%, with a $160 billion daily limit per counterparty on the reverse repo side.

The 3.75%-4% range is the FOMC's target for the federal funds market, where eligible institutions borrow and lend balances held at the Fed overnight without collateral. The administered rates are the tools that keep the market rate inside that band, as the New York Fed describes them. A directive to maintain a range is not the same as a report of where trades actually cleared.

Standing overnight repo offers secured funding: the New York Fed's trading desk buys securities with an agreement to resell them, temporarily adding reserves and limiting upward pressure on money-market rates. Overnight reverse repo runs the other way, selling securities with an agreement to buy them back and draining reserves temporarily. The note also allows the desk, when appropriate, to buy Treasury bills to keep reserves ample, and to roll over principal from Treasury holdings at auction while reinvesting agency principal into bills.

For crypto markets, the distinction that matters is between the chosen rate stance and the operations that hold it in place. The October package describes a hold implemented through an ample-reserves system; transaction results and purchase records would be needed to show how it is executed, and separate evidence would be required to tie any of it to Bitcoin demand.