March 9 (Reuters) - The Federal Reserve Bank of New York on Monday said it had increased its daily cash injections to the banking system to ensure an ample supply of bank reserves.
The daily overnight repurchase agreement - or repo - operations will increase to $150 billion from $100 billion and the two-week operations on March 10 and 12 will increase to $45 billion from the current level of at least $20 billion.
The New York Fed said it will continue to adjust repo operations as needed. The announcement comes as financial markets are in turmoil due to concerns about the fast-spreading coronavirus.
The U.S. central bank began intervening in money markets in the fall when a shortage of reserves led to a spike in short-term borrowing rates. The Fed also began purchasing $60 billion a month in short-term Treasury bills, a move officials say is part of a technical effort to raise the level of reserves in the banking system.
Policymakers previously said the plan was to scale back the bill purchases and the repo operations in the second quarter, after reaching an "ample" supply of reserves. But demand for the Fed's repo operations has been elevated in recent weeks and the operations for term repo have been oversubscribed, in a sign that financial firms could be trying to shore up liquidity amid worries about increased market volatility.
Fed officials cut interest rates last week by half a percentage point in their first intermeeting rate cut since 2008 in a move meant to counter the downside economic risks of the spreading coronavirus. The central bank's target rate is now at a range of 1.00% to 1.25%.
New York Fed President John Williams said in a speech on Thursday that the central bank will do what is needed to make sure there are enough reserves in the system.
"We remain flexible and ready to make adjustments to our operations as needed to ensure that monetary policy is effectively implemented and transmitted to financial markets and the broader economy," Williams said at a dinner in New York. (Reporting By Dan Burns; Additional reporting by Jonnelle Marte; Editing by Chizu Nomiyama)