Fed announces plans to provide more support for repo market

Michigan
Jerome Powell

FILE – In this Wednesday, Sept. 18, 2019 file photo, Federal Reserve Board Chair Jerome Powell speaks at a news conference following a two-day meeting of the Federal Open Market Committee in Washington. A peculiar thing is happening in financial markets this week _ a corner of the financial system where banks and others go for billions of dollars in short-term loans is suddenly in need of cash. To that end, the Federal Reserve has stepped in to inject about $200 billion into the market over the past three days, with plans for another $75 billion on Friday. (AP Photo/Patrick Semansky, File)

WASHINGTON (AP) — The Federal Reserve says it will keep pumping cash into a vital but obscure corner of U.S. financial markets in coming weeks.

The New York Federal Reserve Bank, which handles the central bank’s interactions with financial markets, said Friday that it will offer daily repurchase or “repo” operations of at least $75 billion through Oct. 10. The aim is to maintain the Fed’s key policy rate within its target range.

For the first time since the 2008 financial crisis, the Fed this week conducted a series of major repo operations, injecting $278 billion into the market to deal with a jump in short-term interest rates.

Officials say this week’s spike in rates is not a precursor of the type of underlying troubles that preceded the 2008 crisis.

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