As the Fed was meeting to consider cutting interest rates, it lost control of the very benchmark rate that it manages.

It's been a rough week in the overnight funding market, where interest rates temporarily spiked to as high as 10% for some transactions Monday and Tuesday. The market is considered the basic plumbing for financial markets, where banks who have a short-term need for cash come to fund themselves.

The odd spike in rates forced the Fed to jump in with money market operations aimed at reining them in, and after the second operation Wednesday morning, it seemed to have calmed the market. The Fed announced a third operation for Thursday morning.

In a rare move, the Fed's own benchmark fed funds target rate rose to 2.3% on Tuesday, above the target range set when it cut rates at its last meeting in July. The target range was since cut by a quarter point Wednesday to 1.75% to 2% from 2 to 2.25%.

"This just doesn't look good. You set your target. You're the all-powerful Fed. You're supposed to control it and you can't on Fed day. It looks bad. This has been a tough run for Powell," said Michael Schumacher, director, rate strategy, at Wells Fargo.

Fed Chairman Jerome Powell, in addressing the run up in short-term funding rates, said the Fed had been expecting extra demand because of Treasury settlements and a need for cash by corporations who were paying taxes. But he said it was surprised by the volatile market.

"For the foreseeable future, we're going to be looking at it, if needed, doing the sorts of things we did the last two days, these temporary open market operations That'll be the tool we use," the chairman told reporters after the Fed announced a quarter point rate cut Wednesday afternoon.

Schumacher and other strategists said the Fed's two operations Tuesday and Wednesday morning seem to have calmed the market for now, but the question is why did the wild swing in rates happen in the first place. Strategists say it seems to be the result of a cash crunch, not, for now, the makings of a credit crisis.

Powell said the Fed would be looking at the situation and over the next six weeks the Fed will take stock of what's happening in the market before deciding what steps to take to deal with volatility spikes.

Drew Matus, chief market strategist at MetLife Investment Management said funding markets could be volatile for the next couple of weeks.

"I can't pinpoint what happened. And I'm not sure anyone can. I'm not sure the Fed knows because he said he's going to learn over the next six weeks. I'm taking away from that that the funding markets are going to be more volatile over the next six weeks." Matus said. "They don't have a solution because in part, they're still learning. The market is very different than it was before the crisis. When we began the restart of normalizing policy, this is one of the things that was going to be a learning experience."

A second rate the Fed watches, the secured overnight financing rate, or SOFR, shot up to 5.25% on Tuesday from 2.43%. That is the median rate for $1.2 trillion in short-term funding transactions that occurred Tuesday. SOFR affects floating rates on about $285 billion outstanding in corporate and other loans.