BusinessIn the NewsNews

NY Fed Steps Into Repo Market to Control Soaring Rates

The operation designed to keep the Fed’s benchmark rate trading in a target range

The Federal Reserve Bank of New York said it would carry out up to $75 billion of transactions known as repurchase agreements on Tuesday to relieve funding pressure in overnight money markets.

Strains developed Monday in short-term financing markets that suggested the central bank could lose control of its benchmark federal-funds rate.

The New York Fed said the effective fed-funds rate, or the midpoint of transactions in that overnight market, stood at 2.25%, up from 2.14% on Friday. That is at the top of the Fed’s target range for the rate, which is 2% to 2.25%.

The transactions by the New York Fed are designed to keep the benchmark rate from trading outside of the target range. Before the New York Fed announced the moves, bids in the federal funds market on Tuesday morning reached as high as 5%, according to traders.

The Fed’s rate-setting committee was set to begin a two-day meeting on Tuesday at which officials is likely to lower that range by a quarter-percentage point to cushion the economy from a broader global slowdown.

Show More
Back to top button
Translate »
Subscribe To Globe Afrique

Subscribe To Globe Afrique

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!

Pin It on Pinterest

Share This