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Fed set to provide extra liquidity into 2008
The following Reuter's article is reprinted here in full NEW YORK (Reuters) - The Federal Reserve said on Monday it will conduct a series of term repurchase agreements extending into the new year in response to heightened pressures in money markets. The Fed said the first operation for about $8 billion is set for November 28, to mature January 10, 2008. The timing and the amounts of the subsequent term operations spanning the year end will be influenced by market and reserve developments, the Fed said in a statement. The Fed also said its open market trading desk plans would provide sufficient reserves to resist upward pressures on the fed funds rate above the Federal Open Market Committee's target rate around year end. "Given the high level of attention focused on the coming year end, we hope to reassure market participants of our commitment to providing sufficient balances at that time by starting to provide those balances now," said a New York Fed official who did not wish to be named. The European Central Bank also said on Friday it will continue offering banks additional funds at least until the end of the year to counter renewed tensions in the money market. The Fed last undertook such a year-end operation on December 8, 2005, when it did a 28-day repurchase worth $5 billion. The Fed also undertook a 52-day repurchase agreement worth $4 billion on November 15, 2004. "Obviously liquidity has been an issue, but it is not too surprising -- they are just trying to advertise the fact that they are at the ready," said Beth Malloy, bond market analyst with Briefing.com in Chicago.
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