Fed’s Liquidity Tool Gets a Rebrand After ‘Crisis of Confidence’

The Federal Reserve was forced to quickly pivot from shrinking its balance sheet to adding liquidity back to the financial system last week because of inefficiencies in a key funding facility, Wall Street strategists said.

As part of efforts to regain control of money markets, the central bank removed operational limits to its liquidity tool, the Standing Repo Facility, and rebranded it to “standing repo operations” in a move that appeared aimed at easing the stigma around its use.

It was “a crisis of confidence” in the Fed’s main mechanism for preventing money market strains that prompted officials to launch ...