Fed officials: SRF may be used in September to address liquidity pressure and continue to reduce excess reserves.

[Golden Finance] Dallas Fed President Logan said on Monday that the Fed still has room to reduce excess reserves and expects banks to use their Standing Repo Facility (SRF) next month to alleviate any liquidity pressures. "We may see some temporary pressure around the September tax date and quarter-end. I was pleased to see the market using the SRF at the June quarter-end, and I expect that if necessary, they will use our 'ceiling tool' in September as well." This tool is designed to prevent liquidity shortages by allowing eligible institutions to quickly convert their holdings of U.S. Treasuries into cash and reduce the need for the Fed to intervene in emergencies. Logan stated that as reserves in the banking system decrease, the Fed and other central banks should avoid expanding their balance sheets due to a rise in banks' short-term demand for reserves, or they will face the risk of a "continuously expanding" balance sheet.