The New York Federal Reserve is increasing its available amount of overnight loans to banks from $100 billion to $150 billion through Thursday of last week to ensure that banks and trading houses have the cash needed to keep the markets from melting down.
As well as increasing the overnight amount, the bank also is expanding its two-week repo loan fund from at least $20 billion to at least $45 billion.
The New York Fed stated that expanding the amount of money it’s offering is
“intended to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures that could adversely affect policy implementation.”
TREND FORECAST: Considering the market volatility and demands for cash, even expanding the overnight repo fund by 50 percent and doubling the two-week fund may be too little.
In their attempt to boost equity markets and economies, we forecast increases in central bank liquidity measures such as expanding quantitative easing money injections.
