The Federal Reserve sought to ease concern that banks will be short of cash next month by planning its first long-term injection of year-end funds in two years.
The Fed's New York branch said in a statement that it plans a series of repurchase agreements, starting with an $8 billion injection on Nov. 28, extending into next year. The move follows the European Central Bank's commitment last week to make extra cash available to "counter the re-emerging risk of volatility" in money markets.
"The Fed is pulling out all stops to try to alleviate funding pressures in the money and financing markets as the markets lurch into year-end," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.