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Investment Banking

Fed floods money-markets in bid to keep year-end tumult at bay

‘We now think the Fed has provided enough liquidity’ says Bank of America analyst

The Federal Reserve will be offering more cash in money markets for the next several weeks. That should mean more stability in US interest rates during the year-end period.

While the central bank is expected to hold its policy rate steady for some time, it is proactively responding to technical issues in money markets where the Fed’s policy is transmitted to the broader economy. Specifically, it will allow banks to pledge a greater volume of safe securities such as Treasuries in exchange for cash to tide them over until 2020.

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