NY Fed launches Repo to ease pressure in markets
The New York Federal Reserve comes to the rescue to ease market burdens following a surge in overnight borrowing rates.
New York’s gesture of launching a Repurchase Operation (Repo) was the first time in ten years since doing the same in 2008.
“It’s unprecedented, at least in the post-crisis era,” said Mark Cabana, strategist at Bank of America Merrill Lynch.
On Tuesday, NY Fed launched the repo, purchasing Treasuries and other securities to ease pressure in markets. Its aim is to send in money to the system to maintain borrowing costs above the Fed’s target range, or within striking distance.
NY Fed’s first try was canceled after encountering technical difficulties. But on its second try, the NY Fed successfully put in $53 billion into the system.
The Refinitiv Data yielded an overnight repurchase agreement rate of a 5% increase on Monday. The surge continued on Tuesday up to 10%, triggering NY Fed to intervene and strike a balance.