Fed adds reserves but the relief may be temporary
Peter Oberois
Aug. 10, 2007

The Federal Reserve added more than $38 billion in cash. Gold rallied sharply and stocks recovered. Federal Reserve will try all its means to bring confidence back in the credit system. But can Fed really recover confidence by adding reserves?

One thing is for certain that the Federal Reserve and ECB have the largest cash printing machines. That can halt the process of melt down for now.

The Fed said it provided the $38 billion in reserves and pledged further funds ``as necessary'''' to ``facilitate the orderly functioning'''' of markets. The European Central Bank loaned 61.05 billion euros ($83.6 billion). Central banks in Japan and Australia also added funds as money-market rates rose around the world. Fed funds futures indicate traders are betting on a quarter percentage point rate cut at policy makers'' next meeting on Sept. 18. JPMorgan Chase & Co., one of the 21 securities firms that trades directly with the Fed, said there's a ``genuine possibility'''' the central bank will lower interest rates between meetings if financial markets worsen. ``The stress generated by a repricing of credit risk is testing the resiliency of the global financial system,'''' JPMorgan Chief Economist Bruce Kasman wrote in a report today. The third- largest U.S. bank's shares added 8 cents to $44.25.

Fed adds reserves but the relief may be temporary
Peter Oberois
The Federal Reserve added more than $38 billion in cash. Gold rallied sharply and stocks recovered. Federal Reserve will try all its means to bring confidence back in the credit system. But can Fed really recover confidence by adding reserves?
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