Fed’s $50 Billion Repo Bailout: Credit Crunch Canary or Just Month-End Jitters?
Fed Pumps Billions to Calm a Cash Crunch Late last week, U.S. money markets showed unusual signs of strain. On Friday, October 31, banks and dealers suddenly found cash in short supply to meet their routine funding needs. Overnight lending rates – the cost for banks to borrow short-term cash – surged above the Federal Reserve’s target range, indicating that banks were scrambling for dollars reuters.com. In response, the Federal Reserve executed a massive repo operation to flood the system with cash and stabilize rates. In a repo (short for repurchase agreement), a bank can borrow overnight from the Fed
