Fed completes 3rd straight repo auction to avoid short-term rate surge

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Fed completes 3rd straight repo auction to avoid short-term rate surge
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Tuesday: $53 billion in repos Wednesday: $75 billion Thursday: $75 billion

The New York Federal Reserve Thursday morning completed its third repurchasing operation, or repos, in as many days to stem spikes in crucial overnight funding market for financial institutions. The U.S. central bank carried out $75 billion of repos, with the Street submitting bids for $83.875 billion, sources said, providing liquidity for Wall Street dealers by temporarily buying securities.

Earlier this week, a surge in the repurchasing rate, used by hedge funds and banks to fund their trading operations, pushed the fed-funds rate close to the top of its targeted range. The incident has stirred worries that the central bank is at risk of losing its grip over its benchmark interest rate.

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