Fed's Emergency Loan Program Sees Crucial Rate Hike The Federal Reserve’s emergency lending program, the Bank Term Funding Program (BTFP), witnessed a surge in demand, reaching a record $167.8 billion in borrowing as of January 24. This spike, approximately $6.3 billion higher than the previous week, came just before the Fed raised the program’s interest rate to prevent financial institutions from exploiting its favorable terms for arbitrage. Initially, the BTFP’s borrowing rate of around 4.88% was significantly lower than the rate for parking reserves at the Fed, leading to a risk-free arbitrage opportunity for institutions. However, this loophole was closed with the Fed’s decision to align the BTFP borrowing rate with that of reserve balances, effectively ending the advantageous trade. « Previous Article Next Article » Share This Article Choose Your Platform: Facebook Twitter Google Plus Linkedin Related Posts The Great Cash-Out: Billionaires Have Sold a Combined $11 Billion in Company Stock This Month READ MORE Fed's Rate Strategy for 2024: Stability Over Cuts, Says One Wall St Analyst READ MORE Dollar Heads for Best Run in a Year as Fed Seen Delaying Cuts READ MORE Moderate Inflation Easing Keeps Fed’s InterestRate Cuts on Hold READ MORE Larry Fink joins Jamie Dimon and Jerome Powell is sounding the alarm on ‘snowballing’ national debt: ‘The situation is more urgent than I can ever remember’ READ MORE Add a Comment Cancel replyYour email address will not be published. Required fields are marked *Name * Email * Save my name, email, and website in this browser for the next time I comment. Comment
