The New York Federal Reserve announced a new Reverse Repurchase Agreement Program to reduce some of the liquidity in financial markets. Under the program, the Fed will sell securities from it's portfolio with agreements to repurchase them at later dates. This is an additional sign of tightening from the Fed, in light of last month's increase in the discount rate from 0.5 to 0.75 percent.

The New York Fed originally announced this program in October 2009 in an operating policy statement, stating that they had been working internally on the operational details of repurcahses and reverse repurchases to make it a viable option for draining excess liquidity if the FOMC decided such a program should be used. In the statement, the Fed also announced that reverse repos are nothing new and have even "been in the Federal Reserve's toolkit for years, and the Federal Reserve has conducted them both as recently as December 2008."

Even though this can be interpretted as a method of tightening, the Fed's statement yesterday maintained that the announcement of this program should affect expectations on other monetary policy moves.