The Fed directed $70.2 billion in Short-Term liquidity into markets

Money market operations are aimed at ensuring sufficient liquidity of the financial system.

The Federal Reserve Bank of New York added $70.2 billion of temporary liquidity to financial markets.

The invasion on Tuesday consisted of two parts. One of them was in overnight repurchase agreements totaling $41.7 billion. The second made a 13-day repo for $28.5 billion.

The Fed has accepted all the securities offered in both transactions. Central bank repo transactions take treasury and mortgage-backed securities from the respective banks, which in fact, is a short-term loan of the central bank's funds secured by securities.

The Fed's money market operations are aimed at ensuring that the financial system has sufficient liquidity and that short-term borrowing rates are stable and consistent with the Fed's goals, while the rate on federal funds of the central bank remains within the range of 1.5–1.75% target range. The effective rate of federal funds on Monday was 1.54%. The total general collateral rate for repo transactions was 1.53%, also on Monday.

Congress obliges the Fed to keep inflation low and stable and to promote maximum sustainable job growth. As for decades, the Fed has sought to fulfill these mandates by setting a level of short-term interest rates, which then determines the base level for the total cost of credit in the economy.

In the post-crisis era, the Fed works with a system in which banks hold significant amounts of reserves, both for regulatory reasons and of their own choice. The current set of tools for managing rates is designed to control short-term borrowing costs in this environment.

The Federal Reserve has been operating in the markets in a current way since mid-September when short-term rates soared unexpectedly due to a confluence of factors, the largest of which came from corporate tax payments and the settlement of Treasury debt auctions. The Federal Reserve has used similar operations for decades to manage short-term rates.

Since major interventions began, money market rates have calmed down. The Federal Reserve uses temporary operations to mitigate any possible wild moves by buying treasury bills to build reserves in the banking system. He hopes that by buying treasury bills, the central bank will be able to reduce repo interventions early next year.

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