Fed pumps 41 billion dollars into markets
WASHINGTON (AFP) — The Federal Reserve injected 41 billion dollars in temporary reserves into the US money markets Thursday to help ease ailing credit markets.
The Federal Reserve Bank of New York took the action in three separate operations in so-called repurchase agreements to provide liquidity. It marked one of the largest single-day operations since the mid-year credit market turbulence.
The US central bank typically buys billions of dollars worth of securities from major banks, pumping extra cash into the banking system, which the banks are obliged to repurchase at a later date.
The New York Fed, which conducts the operations, has injected hundreds of billions of dollars into the financial system since early August, when credit flows seized up due to problems linked to the distressed US mortgage market.
The Wall Street Journal, citing analysts, said the large amount may be to stabilize interest rates a day after the central bank cut its key rate a quarter percentage point to 4.50 percent.
