The Fed has been adding large amounts of short-term liquidity to financial
markets since September, when short-term interest rates surged unexpectedly.
Then, big banks that normally lend cash short term to other financial companies
pulled back, causing money-market rates to go up. Most notably, the
federal-funds rate, a key focus of central-bank policy, moved above its range.
When the Fed restarted its repo operations after a halt for just over a decade, it said it expected to wind them down by the end of January as Treasury-bill buying bolstered underlying reserves levels. The Fed also said it hoped to end its balance-sheet-expanding Treasury-bill buying by around June. Fed repo operations have brought calm to money markets, and short-term rates haven't shown big swings.
When the Fed restarted its repo operations after a halt for just over a decade, it said it expected to wind them down by the end of January as Treasury-bill buying bolstered underlying reserves levels. The Fed also said it hoped to end its balance-sheet-expanding Treasury-bill buying by around June. Fed repo operations have brought calm to money markets, and short-term rates haven't shown big swings.
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