(Reuters) – The Federal Reserve Bank of New York will make adjustments to its cash injections in money markets as warranted in the approach to the year-end funding period, a senior Fed official said on Monday.
“It is good to see firms starting to address year-end funding needs, and we understand that, as firms manage their balance sheets more carefully in December, rates can be somewhat more variable and dealers may adjust their approach to our operations,” Lorie Logan, senior vice president in the New York Fed’s markets group, said in prepared remarks to the Annual Primary Dealer Meeting.
“We will monitor conditions closely and will be prepared to adapt open market operations as needed to meet the directives from the (Federal Open Market Committee),” said Logan.
In response to volatility in the repurchase agreement – or repo – market that erupted in September, the Fed has been forced to provide tens of billions of dollars a day in liquidity to bring down funding costs for banks and other financial firms. Logan said the Fed’s actions “have been effective at restoring calm in money markets.”
(Reporting By Dan Burns; Editing by David Gregorio)
