Wall Street banks are preparing for increased pressure on the money market at the end of the year. Analysts expect that financial pressure may prompt the Federal Reserve to consider measures to rebuild the liquidity buffer in this $12.6 trillion market. This week's Federal Reserve interest rate meeting was the first monetary policy meeting held by the central bank since it began to stop downsizing in December. The Federal Reserve has yet to clarify its policies after stopping the downsizing, including the composition of the treasury bond portfolio. As financing costs continue to rise, more and more market participants believe that policymakers should take more specific measures to ease liquidity pressure, such as restarting direct purchases of securities to supplement financial system reserves. They expect Federal Reserve Chairman Jerome Powell to give clues to next steps at the monetary policy meeting that ends Wednesday. Gennadiy Goldberg, head of US interest rate strategy at TD Securities, said, “Powell may suggest that the Federal Reserve is paying more close attention to the front-end market of the yield curve, and he may also suggest that the central bank is getting close to the point where it has to start increasing reserves. This seems to me to be a real issue. I think they're using market performance at the end of the year to determine how much room is left to maneuver in the system.”

Wall Street banks are preparing for increased pressure on the money market at the end of the year. Analysts expect that financial pressure may prompt the Federal Reserve to consider measures to rebuild the liquidity buffer in this $12.6 trillion market. This week's Federal Reserve interest rate meeting was the first monetary policy meeting held by the central bank since it began to stop downsizing in December. The Federal Reserve has yet to clarify its policies after stopping the downsizing, including the composition of the treasury bond portfolio. As financing costs continue to rise, more and more market participants believe that policymakers should take more specific measures to ease liquidity pressure, such as restarting direct purchases of securities to supplement financial system reserves. They expect Federal Reserve Chairman Jerome Powell to give clues to next steps at the monetary policy meeting that ends Wednesday. Gennadiy Goldberg, head of US interest rate strategy at TD Securities, said, “Powell may suggest that the Federal Reserve is paying more close attention to the front-end market of the yield curve, and he may also suggest that the central bank is getting close to the point where it has to start increasing reserves. This seems to me to be a real issue. I think they're using market performance at the end of the year to determine how much room is left to maneuver in the system.”