The Federal Reserve boosts money it’s providing to banks in overnight repo lending to $175 billion to ensure smooth market functioning amid coronavirus.
The Federal Reserve Bank of New York announced Wednesday that it would increase its lending in short-term funding markets in an attempt to calm investors’ fears as the coronavirus wreaks havoc in the financial markets.
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In a statement, the regional Fed bank said it would increase its daily overnight repurchase agreement (repo) operations to at least $175 billion for the next month. That is an increase from the $150 billion announced Monday.
In addition, the bank said “the Desk will also offer three one-month term repo operations, with the first operation occurring on Thursday, March 12, 2020. The amount offered for each of these three operations will be at least $50 billion.”
These operations are intended to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures. The New York Fed also said these moves “should help support smooth functioning of funding markets as market participants implement business resiliency plans in response to the coronavirus.”
