Fed to inject more money into short-term borrowing markets


The Federal Reserve has once again ramped up the amount of money it is injecting into short-term borrowing markets, as concerns grow over potential funding pressures caused by the current market turmoil.

On Wednesday, the New York arm of the central bank announced it will increase the size of its overnight and short-term operations in the repo market, where investors exchange high-quality collateral such as Treasuries for cash. The move comes just days after the Fed increased the size of its loans in order “to support smooth functioning of funding markets”.

The Fed will now provide at least $175bn in overnight loans, up from $150bn offered up earlier in the week, between March 12 and April 13. It will also provide at least $45bn in two-week loans twice per week over the same period.

“The Desk will continue to adjust repo operations as needed to foster efficient and effective policy implementation,” it said in a statement.

The Fed will also offer three one-month loans of at least $50bn. The first operation will occur on Thursday, March 12.


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