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Fed May Look to Cut Money Fund Program Rate, Strategists Say

  • Commercial Paper Funding Facility is set to start April 14
  • Some signs of strain remain in short-term funding markets

The Federal Reserve may lower the rate on its support facility for money market funds to help ease ongoing pressures in short-end credit markets, according to strategists.

While the Money Market Mutual Fund Liquidity Facility has been up and running for two weeks as part of a suite of measures to unclog markets, some signs of tension persist. The London interbank offered rate for dollars -- a benchmark for trillions of dollars of financial products -- remains at elevated levels, despite some easing.