According to a CNN Business article this morning, The New York Federal Reserve spent $53 billion to rescue the overnight lending market. This happened once before… in 2008. “It’s unprecedented, at least in the post-crisis era,” said Mark Cabana, rates strategist at Bank of America Merrill Lynch.
On Tuesday morning the New York Federal Reserve purchased treasuries and other securities to ease the spike in interest rates being charged to banks for short term overnight lending. Overnight repurchase rate hit 10% on Tuesday, well above the 2% target planned. The theory is to pump more funds into the system to ease the pressure on banks
Lots of interesting theories on why this happened and comparisons between now and the last financial crisis ten years ago. The article is well worth the read and is just another sign history is repeating itself. Read the article here.
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