The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest *** trillion U.S. dollars at the end of 2007, it ballooned to approximately **** trillion U.S. dollars by October 29, 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic—both of which resulted in negative annual GDP growth in the U.S.—showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached ***** percent in 2022, the highest since 1991. However, by August 2025, inflation had declined to *** percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at **** percent in August 2023, before the first rate cut since September 2021 occurred in September 2024. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2024, the Fed reported a negative net income of ***** billion U.S. dollars, a stark contrast to the ***** billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over *** billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of ****** billion U.S. dollars in the same year.

It is commonly believed that the Fed's ability to control the federal funds rate stems from its ability to alter the supply of liquidity in the overnight market through open market operations. This paper uses daily data compiled by the author from the records of the Trading Desk of the Federal Reserve Bank of New York over the period March 1, 1984, through December 31, 1996. The author analyzes the Desk's use of its operating procedure in implementing monetary policy and the extent to which open market operations affect the federal funds rate-- the liquidity effect. The author finds that the operating procedure was used to guide daily open market operations. However, there is little evidence of a liquidity effect at the daily frequency and even less evidence at lower frequencies. Consistent with the absence of a liquidity effect, open market operations appear to be a relatively unimportant source of liquidity to the federal funds market.

The U.S. federal funds rate peaked in 2023 at its highest level since the 2007-08 financial crisis, reaching 5.33 percent by December 2023. A significant shift in monetary policy occurred in the second half of 2024, with the Federal Reserve implementing regular rate cuts. By December 2024, the rate had declined to 4.48 percent. What is a central bank rate? The federal funds rate determines the cost of overnight borrowing between banks, allowing them to maintain necessary cash reserves and ensure financial system liquidity. When this rate rises, banks become more inclined to hold rather than lend money, reducing the money supply. While this decreased lending slows economic activity, it helps control inflation by limiting the circulation of money in the economy. Historic perspective The federal funds rate historically follows cyclical patterns, falling during recessions and gradually rising during economic recoveries. Some central banks, notably the European Central Bank, went beyond traditional monetary policy by implementing both aggressive asset purchases and negative interest rates.

The Federal Reserve’s Federal Open Market Committee (FOMC) influences market interest rates by changing the administered rates that it controls, such as the interest rates on overnight repurchase and reverse repurchase agreements. This requires an ample level of bank reserves. Quantitative tightening (QT) reduces the level of reserves. To guard against supply and demand shocks that drive reserves too low, the FOMC may need to hold a buffer above the point at which reserves become scarce. In this Economic Commentary , I present evidence based on inventory theory that the estimated buffer might be relatively small, though the true number is uncertain. Treating the Federal Reserve’s balance sheet as inventory helps to estimate the level of reserves needed to stay above the scarce threshold.

A central bank is the term used to describe the authority responsible for policies that affect a country’s supply of money and credit. More specifically, a central bank uses its tools of monetary policy—open market operations, discount window lending, changes in reserve requirements—to affect short-term interest rates and the monetary base (currency held by the public plus bank reserves) and to achieve important policy goals.

View data of the frequency at which one unit of currency purchases domestically produced goods and services within a given time period.

Content

Reverse repurchase agreements are transactions in which securities are sold to a set of counterparties under an agreement to buy them back from the same party on a specified date at the same price plus interest. Reverse repurchase agreements may be conducted with foreign official and international accounts as a service to the holders of these accounts. All other reverse repurchase agreements, including transactions with primary dealers and a set of eligible money market funds, are open market operations intended to manage the supply of reserve balances; reverse repurchase agreements absorb reserve balances from the banking system for the length of the agreement. As with repurchase agreements, the naming convention used here reflects the transaction from the counterparties' perspective; the Federal Reserve receives cash in a reverse repurchase agreement and provides collateral to the counterparties.

Context

This is a dataset from the Federal Reserve hosted by the Federal Reserve Economic Database (FRED). FRED has a data platform found here and they update their information according to the frequency that the data updates. Explore the Federal Reserve using Kaggle and all of the data sources available through the Federal Reserve organization page!

• Update Frequency: This dataset is updated daily.

• Observation Start: 2002-12-18

• Observation End : 2019-12-18

Acknowledgements

This dataset is maintained using FRED's API and Kaggle's API.

Cover photo by Andrew Pons on Unsplash
Unsplash Images are distributed under a unique Unsplash License.

Term Repurchase Agreements Market Outlook

According to our latest research, the global term repurchase agreements market size reached USD 17.8 trillion in 2024, with a robust compound annual growth rate (CAGR) of 8.2% from 2025 to 2033. The market is projected to expand significantly, attaining a value of USD 35.2 trillion by 2033. This impressive growth is primarily driven by the increasing demand for short-term liquidity solutions among financial institutions and the rising use of term repos as an effective monetary policy tool by central banks worldwide. As per our latest research, the market’s expansion is further fueled by evolving regulatory frameworks and the proliferation of digital trading platforms, which enhance transparency and efficiency in repo transactions.

One of the major growth factors for the term repurchase agreements market is the heightened need for liquidity management across global banking and financial systems. In the aftermath of recent economic disruptions and ongoing volatility in capital markets, financial institutions are increasingly turning to term repos to manage their balance sheets efficiently. The flexibility of term repurchase agreements allows institutions to obtain short- to medium-term funding without the need to liquidate assets, thereby minimizing market impact and supporting overall financial stability. Additionally, the growing complexity of banking regulations, such as Basel III and other liquidity coverage requirements, has compelled banks to adopt more sophisticated liquidity management tools, further propelling the adoption of term repos.

Another significant driver is the rapid digital transformation within the financial sector, which has revolutionized the execution and settlement of repurchase agreements. The integration of advanced technologies, such as blockchain and automated trading platforms, has streamlined repo transactions, reduced operational risks, and improved transparency. This technological evolution has attracted new participants to the market, including non-traditional financial entities and fintech companies, thereby expanding the market’s reach. Furthermore, the advent of electronic trading platforms has facilitated cross-border repo transactions, enabling greater participation from international investors and contributing to market growth.

The increasing involvement of central banks in the term repurchase agreements market is also a key growth catalyst. Central banks in major economies, such as the Federal Reserve, European Central Bank, and the People’s Bank of China, have frequently used term repos as a tool for open market operations to regulate money supply and stabilize interest rates. This active engagement not only supports liquidity in the banking system but also instills confidence among market participants. Moreover, the growing issuance of government securities and high-quality collateral has provided a robust foundation for the repo market, enhancing its attractiveness as a low-risk investment vehicle.

From a regional perspective, North America continues to dominate the global term repurchase agreements market, accounting for the largest share due to its highly developed financial infrastructure and the presence of major institutional investors. Europe follows closely, supported by stringent regulatory standards and active participation by central banks. Meanwhile, the Asia Pacific region is witnessing the fastest growth, driven by the rapid expansion of financial markets in China, India, and Southeast Asia. Latin America and the Middle East & Africa, although still emerging, are showing increasing adoption of term repos as financial markets mature and regulatory frameworks evolve. This regional diversification is expected to further enhance the market’s resilience and growth potential in the coming years.

Type Analysis

The term repurchase agreements market is segmented by type into Overnight, Term, and Open repos. Overnight repos, which involve transactions

According to a survey conducted between July 9 and July 11, 2022, ** percent of Americans thought that Joe Biden was highly responsible for the current trend in the inflation rate. This is compared to ** percent of Americans who said President Biden did not have a lot of responsibility for the current inflation rate.

Inflation in the U.S. Global events in 2022 had a significant impact on the United States. Inflation rose from *** percent in January 2021 to *** percent in June 2022. Significantly higher prices of basic goods led to increased concern over the state of the economy, and the ability to cover increasing monthly costs with the same income. Low interest rates, COVID-19-related supply constraints, corporate profiteering, and strong consumer spending had already put pressure on prices before Russia’s invasion of Ukraine in February 2022. Despite rising wages on paper, the rapid growth of consumer prices resulted in an overall decline in real hourly earnings in the first half of 2022.

How much control does Joe Biden have over inflation? The bulk of economic performance and the inflation rate is determined by factors outside the President’s direct control, but U.S. presidents are often held accountable for it. Some of those factors are market forces, private business, productivity growth, the state of the global economy, and policies of the Federal Reserve. Although high-spending decisions such as the 2021 COVID-19 relief bill may have contributed to rising inflation rates, the bill has been seen by economists as a necessary intervention for preventing a recession at the time, as well as being of significant importance to low-income workers impacted by the pandemic.

The most important tool for curbing inflation and controlling the U.S. economy is the Federal Reserve. The Reserve has the ability to set, raise, and lower interest rates and determine the wider monetary policy for the United States – something out of the president’s control. In June 2022, the Reserve announced it would raise interest rates **** percent for the second time that year – hoisting the rate to a target range of **** to *** percent – in an attempt to slow consumer demand and balance demand with supply. However, it can often take time before the impacts of interventions by the Federal Reserve are seen in the public’s day-to-day lives. Most economists expect this wave of inflation to pass in a year to 18 months.