NEW YORK The New York Federal Reserve said on Thursday it will raise the allocation limit in the testing of its overnight, fixed-rate reverse purchase agreement program, starting on Friday.
The New York Fed, which conducts open market operations for the central bank, said its trading desk will increase the allocation limit to $1 billion per counterparty from the current level of $500 million.
"All other terms of the exercise will remain the same," the New York Fed said in a statement on its website.
This week, the New York Fed has held a daily exercise of this reverse repo program with primary dealers, money market mutual funds and government-sponsored enterprises, in preparation for when the central bank decides to drain cash from the banking system to help achieve its interest rate target.
"These operations do not represent a change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future," it said.
(Reporting by Richard Leong; Editing by Bernadette Baum)