Ex-Fed Officials: Fed should target repo rate to reduce market volatility

Dhwani Mehta FXStreet

Two former US Federal Reserve (Fed) officials Brian Sack and Joseph Gagnon wrote in a blog published on Thursday, the Fed needs to use the repo rate to minimize the recent disruptive money market volatility that poses risks to the economy.

Key Quotes (via Reuters):

“Volatility in this market threatens the functioning of markets more broadly and could ultimately hurt the economy.”

“A better approach is needed.”

“Not opposed to the Fed’s “floor system,” which it uses to set rates by paying interest on bank reserves.”

“The Fed should make changes to create a system that is more resilient and effective.”

The Fed should consider targeting the repo rate when setting policy instead of targeting the fed funds rate.”

The US dollar index rallied in the US last session after the Fed then said it would boost the size of its intervention in the repurchase, or repo, market to $100 billion overnight Thursday from $75 billion, while doubling the size of a two-week offering Thursday to $60 billion, per WSJ.

The spot now trades back above the 99 handle, testing three-week tops, as markets look past the US political turmoil for the time being.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD softens below 1.1800 on Fed hawkish remarks

The EUR/USD pair edges lower to around 1.1775 during the early Asian session on Wednesday, pressured by a renewed US Dollar demand. Traders await the US President Donald Trump's State of the Union address later on Wednesday for clarity on fiscal policies.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold appears offered around $5,150

Gold is giving back a good portion of the recent multi-day rally, receding to the $5,150 zone per troy ounce amid the decent bounce in the US Dollar and mixed US Treasuty yields. In the meantime, markets’ attention remain on upcoming comments from Fed speakers.

Coinbase launches stocks and ETF trading amid ongoing plans for all-in-one platform

Coinbase has launched stocks and ETF trading for US customers on its platform, according to an X post on Tuesday. The service offers commission-free trading available 24 hours a day, five days a week, for eligible securities. Traders deposit US dollars or USDC to fund positions and access fractional shares as low as $1.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.