NEW YORK (Reuters):

The United States Federal Reserve's daily money market operations yesterday were larger than usual, but were not injections of liquidity similar to those made earlier in the day by the European Central Bank, analysts said.

The Fed's money market operations were to bring down U.S. benchmark overnight rates, which were trading at 5.5 per cent in the morning, above the U.S. central bank's target of 5.25 per cent, they said.

"The Fed's liquidity injection is a normal response to funds trading above target, not an artificial offering of liquidity to calm financial markets," said Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut.

"We are not seeing a so-called 'credit crunch' in the U.S. money market," he added.

The Fed added US$24 billion to the banking system on Thursday.

The ECB injected a record €94.8 billion in overnight funds in the money markets after short-term interest rates soared when France's biggest listed bank, BNP Paribas, froze withdrawals from three funds.

"I don't think there is any direct relationship (to the ECB's operations). The injections were not coordinated," said Ward McCarthy, economist and managing director of Stone and McCarthy Research Associates, in Princeton, New Jersey. "What the ECB did was highly unusual. That was an operation intended to relieve an extremely dire situation."

TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, AUGUST 10, 2007