By Michael S. Derby 

The Federal Reserve Bank of New York added $107.4 billion in temporary liquidity to financial markets Thursday.

The intervention via overnight repurchase agreements, or repos, totaled $78.7 billion. There was also a $28.7 billion 14-day repo operation. The Fed took all the securities offered to it by eligible banks.

Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by the securities.

The Fed's interventions are aimed at ensuring that the financial system has enough liquidity and that short-term borrowing rates are stable and consistent with Fed goals, with the central bank's federal-funds rate staying within the 1.5%-to-1.75% target range. The effective fed-funds rate stood at 1.55% on Wednesday. The broad general collateral rate for repo trading stood at 1.50%, also for Wednesday.

The Fed has been intervening in markets in the current fashion since mid-September, when short-term rates unexpectedly shot up on a confluence of factors. The Fed has used similar operations for decades to manage short-term rates.

Since the large interventions started, money-market rates have calmed down. The Fed is using temporary operations to tamp down any possible wild moves, while purchasing Treasury bills to build up reserves in the banking system. It hopes that by buying Treasury bills, the central bank will be able to cut back on repo interventions at the start of next year.

The central bank currently expects to buy Treasury bills through the middle of next year.

The Fed is also taking stock of whether post-financial-crisis banking regulations may be causing issues in the markets by driving banks to hold reserves over other highly liquid securities. When it comes to the September tumult, these regulations "were probably not the decisive contributors, but they were contributors and I think we need to examine them," Fed Vice Chairman for Supervision Randal Quarles told a congressional panel Wednesday.

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

(END) Dow Jones Newswires

December 05, 2019 13:02 ET (18:02 GMT)