WASHINGTON -- The Federal Reserve said on Friday it was was providing liquidity as needed to keep keep financial markets operating normally.

"The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets," the Fed said in a statement.

It added, "The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4 percent."

The U.S. central bank's statement was issued shortly after the Fed added liquidity into the banking system for a second day running through repurchase agreements that added $19 billion of temporary reserves.

The Fed acknowledged that some banks might encounter some difficulties amid current market turmoil.

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"In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets," the Fed statement said.

It added that, as always, its discount window was open as a source of short-term funds for banks.

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