Fed Funds Open at 0.05%, Within Target Range, According to ICAP

Fed funds, the U.S. overnight inter-bank lending rate, opened at 0.05 percent, within the Federal Reserve’s target of zero to 0.25 percent.

Fed funds closed at 0.07 percent yesterday after trading from 0.04 percent to 0.25 percent and averaging 0.05 percent, ICAP Plc, the world’s largest inter-dealer broker, said in an e-mailed statement.

The central bank will acquire $3.75 billion to $4.75 billion of Treasuries maturing from February 2018 to October 2018. The permanent open market operations are part of the Fed’s latest round of debt purchases, known as quantitative easing, aimed to keep long-term rates low and support economic growth.

The Federal Reserve Bank of New York will release its schedule for its Treasury purchases in February at 3 p.m. New York time.

The Fed may conduct a test of an overnight fixed-rate reverse repo facility. The temporary open-market operations will use Treasuries as collateral.

In repos, the Fed buys U.S. Treasury, mortgage-backed and agency debt from its primary dealers for a set period, temporarily raising the amount of money available in the banking system. At maturity, the securities are returned to the dealers, and the cash to the Fed. In reverse repos, temporary funds are drained from the system.

To contact the reporter on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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