Fed Throws $75 Billion of Liquidity Into Repo Market Again

Federal Reserve
BRENDAN SMIALOWSKI/AFP/Getty Images

The Federal Reserve Bank of New York stepped into short term funding markets for a second day on Wednesday, swapping $75 billion of cash for securities held by financial institutions.

The Fed said that demand exceeded its offer to buy $75 billion of securities by $5 billion.

On Tuesday, the Fed announced a $75 billion facility but purchased only $53 billion in an effort to move overnight borrowing costs back down towards its Fed Funds target of between 2 and 2.25 percent. Rates had jumped up to 4 percent on Monday.

The cause of the spike in the rates for very short term borrowing, knowns as repos or repurchase agreements, is not known.

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