New York Fed steps into market to move interest rates

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For the first time in more than a decade, the New York Federal Reserve Bank announced Tuesday it was pumping billions of dollars into financial markets to keep short-term interest rates in line with t

he Federal Reserve's target range.

The New York fed authorized $75 billion in repurchase agreements -- known as "repos" -- in an effort to keep the Fed's benchmark lending rate "within the target range of 2 to 2-1/4 percent." But on Tuesday, as demand for cash rose amid falling bank reserves, the rate had moved to the top of the current range.

She explained that technical factors including September payments of corporate taxes, as well as a huge quantity of Treasury debt issuance, created the drop in bank reserves.

 

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