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Fed's interventions in the markets

Thu, Aug 23 2007, 15:04 GMT
by Marina Schiaffino

FXstreet.com


FedThe Fed implemented a cut in the discount rate to control the current financial market crisis in August 17. More or less since the same days many central banks started to inject large amounts of funds to ensure liquidity of markets. On August 21, it lowered the fee to borrow Treasury securities, yet another measure to ease constraints in the marketplace

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Analysts Comments

  • Tony Crescenzi, analyst at Miller Tabak:
    "The Fed is effectively 'sterilizing' this discount window lending by its announced intention to cut its Treasury bill purchases a total of 10 bln usd this week and next. If the Fed were to lend 10 bln usd and not sterilize it.The funds rate would fall, reflecting the new liquidity." - Thomson Financial News
  • Krishna Ramaswamy, analyst at Thomson IFR Markets:
    "The excess supply should help alleviate some of the recent stress in the bill market.There should continue to be plenty of supply over the coming weeks,' he said, 'and it would be expected that rates cheapen from here." - Thomson Financial News

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