WASHINGTON : The US Federal Reserve said on Wednesday it has injected US$7 billion into the jittery financial system to meet increased liquidity demands. The Federal Reserve Bank of New York, which handles the operations of the short-term federal funds market, made the cash infusion, a spokesman for the New York Fed said.
The amount was much smaller than the Fed's injections late last week to ease credit crunched by problems in the high-risk sub-prime mortgage sector.
The Fed pumped a total of US$38 billion into the financial system on Thursday and US$24 billion on Friday. The central bank added US$2 billion on Monday but did not intervene on Tuesday.
Under normal circumstances, these almost-daily operations add about US$5 billion to US$10 billion a day to the markets.
Before markets opened on Wall Street on Wednesday, the New York Fed said that market conditions suggest that an injection will be needed in the federal funds market "to accommodate heightened reserve needs."
The bank said it "stands ready to conduct further operations later in the day if needed." - AFP/de
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