The Federal Reserve pumped $19 billion in temporary funds into the banking system today by buying up mortgage-backed securities. The move is aimed to insure that there is enough cash available in the credit markets and keep the interest rate close to the Fed's target of 5.25%. It also makes it clear that the Fed does not yet plan to cut that interest rate, Bloomberg reports.
The Fed also added $24 billion yesterday, the most since April. The additions have dropped the federal funds' rate down to 5.375%, after it began trading at 6%. "It looks like this will be enough to address the problem today because of the pace at which the funds rate moved down," says a market strategist.