“The Federal Reserve Bank of New York bolstered its scheduled repo operations Thursday (December 12) planning larger capital injections through the end of the year to avoid another lending rate spike. The Fed boosted its overnight repurchase agreements set between December 31 and January 2 to a $150 billion cap from the previous $120 billion level, according to a Thursday release. The figure serves as a limit for banks seeking additional liquidity, and it's possible firms' demand won't meet the increased supply.
The expanded operations arrive as the overnight lending rate faces heightened stress from banks' year-end activity. Legislation born from the financial crisis obliges lenders to hold a larger fraction of cash as emergency reserves. Year-end evaluations dictate how large a proportion banks must hold, leading firms to lend less cash as they look to prove liquidity to regulators. The updated repo limit is "to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures around year end," the bank said in a statement.” https://markets.businessinsider.com/news/stocks/fed-repo-operations-boosted-avoid-year-end-lending-rate-crisis-2019-12-1028762609ALSO - From
*The Financial Times:
Fed plans to double repo market intervention to avoid cash crunchhttps://www.ft.com/content/f9c20bde-1d23-11ea-97df-cc63de1d73f4FT is difficult to access without subscription. if determined, try cut & pasting the article title (bold print) and than searching on Google.
