Fed Funds Borrowing Leaps to New High as Banks Scramble for Cash
- Trading volume in federal funds market rises to $120 billion
- Jump suggests banks are in need of funding as deposits leave
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Trading in a key overnight funding market surged to the highest in at least seven years, an indication Federal Reserve tightening is putting increasing pressure on liquidity in the banking system.
Daily borrowing in federal funds rose to $120 billion on Jan. 27, according to New York Fed data published Monday, up from $113 billion in the previous session. That marked the highest level since at least 2016, when the central bank overhauled publication of the data.