By Michael S. Derby 

The New York Fed added permanent and temporary liquidity to financial markets Wednesday.

The Fed said it bought $7.501 billion in Treasury bills to expand a balance sheet that is just under $4 trillion. As it has been since the Fed restarted large-scale Treasury-bill buying last week, dealer interest remained strong, with eligible banks offering the Fed $44.218 billion in securities.

On the temporary front, the Fed added $49.845 billion in one-day liquidity to financial markets Wednesday.

The overnight repurchase-agreement operation took in $42.254 billion in Treasurys, $100 million in agency securities and $7.5 billion in mortgage-backed securities. Banks that participated collectively sought less liquidity than the Fed was willing to offer.

Wednesday's operation by the Fed is part of an effort to help tame volatility in short-term rate markets with temporary and permanent injections of liquidity. Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a loan of central bank cash, collateralized by dealer-owned bonds. The bill purchases permanently add reserves to the financial system and are seen as a more-enduring fix for potential market volatility.

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

October 23, 2019 12:13 ET (16:13 GMT)