WASHINGTON (AFP) — The Federal Reserve injected 47.25 billion dollars into US money markets Thursday to help ease tight liquidity, the central bank said.
It was the largest single-day cash infusion since September 2001, when the terror attacks in New York and Washington shocked the financial markets, according to the Federal Reserve of New York, which conducts the operations for the Fed.
The New York Fed said it had injected the money in three separate operations: 19.25 billion dollars in a one-day operation, 20 billion dollars in a six-day operation and eight billion dollars in a 14-day operation.
However, due to the expiration of other operations, the combined injections produced a net increase in liquidity in the banking system of 6.75 billion dollars, which is considered a moderate rise, a New York Fed official said.
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 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.
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