The Federal Reserve on Wednesday injected more than $14 billion in temporary funds into the banking system, the latest in several such moves as the calendar page turned to 2008. The Federal Reserve Bank of New York accepted $14.25 billion in bids through a one-day repurchase agreement, or repo, its first of the year. Through the agreements, the Fed makes collateralized loans to offset temporary swings in bank reserves. Banks submitted $27.15 billion in bids through the auction. The stop-out rate ranged from 3.98 to 4.34, depending on the type of collateral offered.
The move comes just two days after the New York Fed injected $17.5 billion in separate four- and two-day repos. In an accompanying statement, the New York Fed said the large operations were "intended to offset the drain to reserves arising from an elevated balance in the Treasury's account at the Fed."