According to online reports, Roberto Pelley, the New York Fed's official responsible for implementing monetary policy, said on Thursday that although market liquidity is still abundant, the Fed is encouraging financial institutions to use the Standing Repo Facility (SRF) more actively when appropriate. "I encourage counterparties to use SRF when it is economically reasonable," Pelley noted. This tool exists to support the effective implementation of monetary policy and promote the smooth operation of the market. If the SRF can function as designed, it will be in everyone's best interest." In his speech, Pelley reiterated that the New York Fed will adjust its operating arrangements in the near future, expand SRF operations, which are currently only conducted in the afternoon, to the morning session, and complete settlement on the same day. This is an important step in improving the effectiveness of the tool and, from a marginal perspective, will also help the Fed maintain a relatively small balance sheet size. Pelley pointed out that continued balance sheet contraction may still have some way to go, despite signs that money market liquidity is tightening. As the Federal Reserve contracts its balance sheet and reduces reserve levels, upward pressure on money market interest rates is likely to increase.