The morning after the Federal Reserve fired its most available weapons to help the economy navigate the coronavirus threat, demand for its temporary liquidity again fell well short of what the central bank was willing to provide.
On Monday, the Fed offered eligible banks two repurchase agreement operations, or repos. In the one-day interventions, so-called primary dealers sought $129.6 billion in loans versus the $175 billion the Fed was willing to provide. The Fed's repo operation with a $500 billion cap that runs until April 13 garnered even more modest demand, with dealers taking $18.45 billion.
Later Monday morning, the Fed announced that it would offer a second repo operation with a $500 billion cap, even as its earlier foray saw limited interest. In announcing the action, the Fed said "this action is taken to ensure that the supply of reserves remains ample and to support the smooth functioning of short-term U.S. dollar funding markets."
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