As month end approaches and monthly positions adjust, central bankers first priority is check money supplies as they are constrained by not month end but the 35 day Maintenance Period instituted by the United States in 1979. The 35 day Maintenance Period then carried over in 2000 to a central bank meeting every 35 days. Forward Guidance as next priority allowed the central banks to inform all is fine and the news conference validates the various economic scenarios.
Prior to the build in stimulus and money supply concentrations by central banks, overnight rates free floated as market determinations rather than the new tool to hold overnight rates in tiny ranges. A bank in deficit at end of day had to buy currency to balance while a surplus bank sold currency. The overall supply of bank money at day’s end determined if the overnight rate reported higher or lower and in turn affected other market interest rates. Interest rates and money supplies back then as today held an adverse relationship. By week’s end, the central bank then added or subtracted monies to maintain a balanced money system.
Under stimulus, the system shifted More later