Fed policy makers discussed the possibility of establishing such a facility when they met in June, but reached no conclusions, according to the minutes of that gathering.
Gagnon and Sack also called on the central bank to abandon its federal funds rate target and adopt the repo rate—as measured by the secured overnight financing rate—as its objective instead.
“The Fed should be explicit about its desire to control the repo rate,” they said.
Sack was formerly an executive vice president at the Federal Reserve Bank of New York, where he served as the head of the Markets Group and the manager of the System Open Market Account for the Fed from 2009 to 2012.
Before joining Peterson in 2009, Gagnon was visiting associate director for the Fed’s Division of Monetary Affairs. He also served in a variety of other posts at the central bank and the Treasury Department in a public sector career that began in 1987.
This article was provided by Bloomberg News.