Pump it up! US Fed adds $104 billion in liquidity to markets in just one day
The Federal Reserve, which has been boosting liquidity since mid-September, injected $104.293 billion to the financial markets on Thursday.
The addition of liquidity came in two parts, with one happening via overnight repurchase agreements totaling $73.593 billion. The other was from a $30.7 billion 13-day repo operation. In both interventions, dealers took less money than the Fed was willing to provide.
The US Central Bank’s market operations are aimed at ensuring that the financial system has enough liquidity, after the short-term funding rate spiked to 10 percent from two percent overnight in September. The effective Fed-funds rate stood within the target rate on Wednesday, at 1.55 percent. The broad general collateral rate for repo trading stood at 1.54 percent.
The Federal Reserve’s practice of adding and subtracting liquidity from short-term markets to manage short-term interest rates goes back decades. However, it is raising concerns among analysts and portfolio managers who claim that the size of recent operations are large and may not be enough to solve lending pressures.
The US Central Bank’s market operations are aimed at ensuring that the financial system has enough liquidity, after the short-term funding rate spiked to 10 percent from two percent overnight in September. The effective Fed-funds rate stood within the target rate on Wednesday, at 1.55 percent. The broad general collateral rate for repo trading stood at 1.54 percent.
The Federal Reserve’s practice of adding and subtracting liquidity from short-term markets to manage short-term interest rates goes back decades. However, it is raising concerns among analysts and portfolio managers who claim that the size of recent operations are large and may not be enough to solve lending pressures.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
