Economics
Fed May Target Commercial Paper Purchases, BofA Says
- Central bank may announce two CP facilities Sunday: BofA
- BofA says CP market frozen, could pressure bank funding
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The Federal Reserve may take steps to ease strains in the commercial paper market, a source of short-term funds for companies that has frozen up amid the global market rout, according to Bank of America Corp. strategists.
The central bank could announce facilities to buy commercial paper Sunday evening, strategists Mark Cabana and Olivia Lima said in a note dated March 13. Without Fed intervention, spiraling costs of the short-term IOUs could pressure bank balance sheets and cause a run on money-market funds that hold the debt, they said.