WASHINGTON (AP) — The Latest on the Federal Reserve’s monetary policy meeting (all times local):
For the second time in as many days, the Federal Reserve Bank of New York is stepping in to free up billions of dollars to avert spiking overnight borrowing costs.
The New York Fed on Tuesday infused that market with more than $53 billion as overnight borrowing costs surged close to 10%. It was the first time such an action was taken since 2008.
The New York Fed has bumped that figure up to $75 billion for Wednesday.
Economists with Wells Fargo believe the logjam in intrabank lending markets is being caused by required quarterly tax payments from corporations. They need to have cash on hand to make those payments and rely on overnight lending markets for the funding.
A key date for those corporations was Sept. 15, according to Wells Fargo, which has dried up the pool of funding used by broader markets for quick cash.
Stock markets are subdued and the price of oil is down slightly as investors look ahead to an expected interest rate cut from the Federal Reserve and monitor the fallout from attacks on Saudi Arabia’s oil plants.
Futures for the Dow and the S&P 500 are down 0.1% while markets in Asia closed little changed – the Nikkei 225 dropped 0.2% and the Hang Seng slipped 0.1%. European stocks are up slightly, with Germany’s DAX 0.1% higher.
The Fed is poised to cut its key rate for a second time Wednesday by a quarter point to help the economy at a time of heightened trade uncertainty and slowing global growth. Most economists expect one or two more rate cuts this year beginning this week.
The U.S. benchmark for crude oil is down 29 cents at $59.05 a barrel after Saudi authorities said 50% of the production cut by the attack on its oil processing plant has been restored.
The Federal Reserve looks poised to cut interest rates for a second time Wednesday to help extend the economic expansion in the face of global weakness, President Donald Trump’s trade war with China and geopolitical risks such as the attacks on Saudi Arabia’s oil facilities.
The modest rate cut the Fed announced in July — its first in more than a decade — left its benchmark rate in a range of 2% to 2.25%. It also raised expectations that it would follow with up to three additional quarter-point rate cuts this year.
Most economists have since scaled back their forecasts for further rate cuts this year to one or two beginning Wednesday. A resumption of trade talks and a less antagonistic tone between Washington and Beijing have supported that view.