FED Pass

A Fed pass is one of the many indirect tools that the US Federal Reserve has at its disposal to tinker with the U.S. monetary policy.

A Fed pass is when the Fed (a.k.a. the Federal Reserve) moves more reserves into the banking system, which causes an increase in credit availability. When more credit can be sold, more people can get more credit, boosting the economy via mortgages and other types of loans.

How does the Fed move more reserves into the banking system? By buying back U.S. Treasury bonds from banks and other bond-holders. The cash that is used to buy back the bonds is the Fed pass...the buck that is passed to the banks. This frees up banks, which now have more money on the line to sell.