INSTANT VIEW 2-US Fed announces central bank coordination

NEW YORK (Reuters) - The U.S. Federal Reserve announced on Tuesday that it was taking coordinated action with other central banks to provide liquidity and also said it was lending up to $200 billion of Treasury securities to primary dealers.

Also, the Fed said dealers can use more types of collateral, including private label residential mortgages.

COMMENTS:

RUDY NARVAS, SENIOR ANALYST, 4CAST LTD, NEW YORK:

"It is pretty consistent with the Fed trying to be more creative with inter-bank lending markets tightening up since the beginning of January.

"The increasing of the term repos and also the increasing of the size of the TAF are consistent with a Fed trying to ease credit conditions. Also there were rumors today that the Fed might outright buy Fannie Mae and Freddie Mac securities, which was also putting pressure on the bond market, along with the narrowing of swap spreads and agencies.

"(Under the new facility) they can also buy the high-rated corporates and things like that. One of the things they are trying to accomplish is not just to increase liquidity but also decrease the risk premium on non-Treasury securities.

"There is a feeling that if they keep on doing things like this they could influence the pricing mechanism and also ease credit conditions.

"A lot of agency securities are illiquid not just because they are afraid to sell them -- at least the Fed is giving some sort of window to dump these things."

TOM BENTZ, ANALYST, BNP PARIBAS COMMODITY FUTURES INC., NEW

YORK:

"Oil is definitely reacting to the reversal of the dollar, on coordinated central bank liquidity action."

MARC CHANDLER, HEAD OF GLOBAL CURRENCY STRATEGY, BOWN BROTHERS

HARRIMAN, NEW YORK:

"The news has seen the dollar jump, equities rally and bonds sell-off. Despite reports that the Fed was soon to announce new measures, the market was caught leaning the wrong way.

"In the bigger picture, is unclear whether this will prove sufficient, but it does demonstrate the Fed's resolve. Although the swap lines and separate announcements by other central banks will cast an air of coordination around today's announcement, the fact is that the ECB and SNB have plenty of dollars to use of their own if they wanted to, which was the point made in Dec by at least one Fed official.