Tags: US | Fed | Reverse | Repurchase | Deals

Fed to Begin Pulling Economic Support from Market

Monday, 08 Mar 2010 11:20 AM

 

The Federal Reserve is beginning a program to drain some of the unprecedented liquidity it added to markets during the credit crisis.

The Federal Reserve Bank of New York said Monday it will begin conducting reverse repurchase agreements. That's when the Fed sells securities from its portfolio with an agreement to buy them back later.

The Fed launched dozens of programs to add liquidity to credit markets during the peak of the credit crisis in late 2008 after the market came to a standstill. The Fed is beginning to withdraw the measures now that the crisis has passed.

The program is open to primary dealers as well as domestic money market mutual funds.

The Fed first announced it would launch the reverse repurchase program on Oct. 19.

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