The Fed resumes asset purchases

For 48 hours, three weeks ago, the repo market experienced a surge in the rates at which liquidity is traded, indicating that its amount was insufficient or, at least, poorly distributed. Through its special interventions, the Fed repaired the leak. To prevent a repetition of the problem, the Fed decided to increase its balance sheet again (purchase of assets financed by the creation of bank reserves). The goal and amounts involved are different from a traditional QE. This episod...