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Fed announced 2newSteps toAddCash toBankingSystem 03/07

The Federal Reserve on Friday announced two new steps to add cash to the banking system. The Fed said the measures were needed to address "heightened liquidity pressures in term funding markets." The Fed said it was in close contact with foreign central banks concerning liquidity conditions in markets.

In the first measure, the Fed said it would increase the size of the two Term Auction Facility auctions to $50 billion each or a total of $100 billion. This is a total increase of $40 billion.

Secondly, the Fed said it will initiate a series of term repurchase transactions that are expected to cumulate to $100 billion. These transactions will be conducted as 28-day term repos in which primary dealers may elect to deliver as collateral agency mortgage backed securities if they so choose.

The Fed said it would consider increasing both the repos and the TAF if conditions warrant.

by WASHINGTON (MarketWatch) --