Fed Pumps $19B Into Market

Will add $19B in temporary funds to bolster credit markets
By Caroline Miller,  Newser Staff
Posted Aug 10, 2007 8:39 AM CDT
Federal Reserve Bank Cleveland   ((c) Craig Hatfield)
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(Newser) – 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.