The Fed just pumped $128 billion into markets to pull down interest rates, its first injection in 10 years

• The Federal Reserve took action in financial markets for a second straight day Wednesday in another attempt to keep interest rates from moving higher.
• The central bank has injected a total of $128 billion into markets - $53 billion on Tuesday and another $75 billion on Wednesday.
• This week marked the first time the central bank had taken such steps since the global financial crisis 10 years ago.
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The Federal Reserve took action in financial markets for a second day Wednesday in another attempt to keep interest rates from moving higher. It marked the first time the central bank had taken such steps since the global financial crisis 10 years ago.

The New York Federal Reserve said on Wednesday it would inject $75 billion into the market through another overnight repurchase agreement, or repo, aimed at keeping the federal funds rate within its target range of between 2% and 2.25%.

An initial round of the market operation of more than $50 billion on Tuesday only temporarily reined in borrowing costs. Short-term rates had previously shot up as high as 10%, threatening to disrupt the bond market and the overall lending system.

There is debate around the exact reason the amount of cash banks have on hand for short-term funding needs dried up early this week. But the shortage came after businesses had to pay quarterly tax bills at the same time that the Treasury issued billions in new bonds.

A widening gap between federal revenue and expenditures has exacerbated volatility in the $2 trillion repo market. The national budget deficit jumped past $1 trillion in the first 11 months of the fiscal year, a level it hadn't reached since 2012 when the US was still climbing out of the Great Recession.

Separately on Wednesday, the Fed is expected to announce it would lower interest rates by a quarter percentage point as officials look to insulate the economy from a potential downturn. Though hiring and spending remain solid in the US, investors have grown increasingly jittery about slower global growth and trade tensions.

Read more: Trump will likely be let down on his demand for a 'Big Interest Rate Drop' this week