As many have noted, there is a link between funding liquidity and market liquidity, and for Treasury markets the links to funding in the repo market are especially close. 11 Post crisis reforms have made the repo market safer but also raised the costs of repo transactions.
It should, however, also be realised that such a policy stance does not provide unconditional protection against speculative capital outflows. External economic shocks or perceived poor policy measures can still trigger a reversal in capital movements. Monetary policy cannot prevent these reversals. International investors make their decisions on the basis of a wide variety of developments, including price stability.