The US Federal Reserve added a total of $41 billion in temporary reserves to the banking system on Thursday, the biggest single day of such injections since September 2001. The Fed's infusions may reflect the central bank's efforts to bring the federal funds rate down nearer to its target just one day after a widely expected rate cut.
Fed funds last traded at 4.625 percent on the open market, above the Fed's target rate of 4.50 percent. A Fed spokesman would not comment on the total size of the operations, but did say it was the largest single day of operations since a total of $50.35 billion was injected on September 19, 2001, following the September 11, 2001, attacks on the World Trade Center.
On Thursday, the central bank conducted $8 billion of 14-day repurchases, $21 billion of seven-day repurchases and $12 billion of overnight repurchase agreements.
The total on Thursday surpassed the $38 billion the Fed injected on August 10, which was generally seen as the beginning of a global credit crisis. At the time, the Fed and the European Central Bank ramped up temporary liquidity operations with the intent of alleviating strains in short-term lending markets. The Fed also injected a total of $38 billion on September 27.
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