The U.S. Federal Reserve took the unusual step of refraining from undertaking an open
market operation so far Tuesday, in the aftermath of last week's substantial infusions of liquidity into the banking system.
This marked a pause so far in the Fed's actions over the past three trading days when it injected a substantial amount of cash into the market to increase liquidity.
If the Fed does not undertake an open market operation on Tuesday, it will be the first working day in three months it has not done so.
Global central banks have scaled back their cash injections so far this week after the hefty additions of funds they pumped into financial systems last week in efforts intended to calm jittery credit markets.
The Federal Reserve refrained from undertaking a money market operation at its usual operating time of 9:30 a.m. ET, a New York Federal Reserve spokesman confirmed.
The New York Fed had said earlier in a statement on its Web site that it was evaluating whether or not to conduct a market operation at 9:30 a.m. ET.
Federal funds, the benchmark overnight lending rate to banks, last traded at 5.00 percent, below the 5.25 percent rate the Fed targets.
Earlier Tuesday, the European Central Bank injected $10.6 billion and the euro short-term money market held steady. In contrast, the Bank of Japan on Tuesday drained a total of $13.6 billion from the banking system, reversing two days of cash injections that drove overnight call rates to near zero as global money markets calmed.
The Federal Reserve's statement said: "In addition, the Desk stands ready to conduct additional operations later in the day as needed."
That replicated the wording of a statement on the Web site the New York Fed released Monday, when the Fed went on to add $2 billion of temporary reserves to the banking system via an overnight repurchase operation.
On Friday, the Fed added a hefty $38 billion of liquidity -- the biggest temporary addition to the banking system the U.S. central bank had made in a single day since Sept. 19, 2001, in the aftermath of the Sept. 11 attacks.
On Thursday, the Fed pumped $24 billion into the U.S. banking system -- its biggest single-day cash injection in nearly four months. But that infusion paled in comparison to the European Central Bank's action earlier in the day, when it provided a record $130 billion in extra liquidity.