Use of Fed Term Funding Tool Rises to Record in Arbitrage Play
- Use rose to all-time high $136 billion in week through Dec. 27
- Facility pricing more attractive as rate-cut bets increase
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Banks borrowed a record amount from the Federal Reserve’s newest backstop facility in the most recent week as increasing wagers on interest-rate cuts made it a more attractive choice.
Data from the Fed showed a record high $136 billion in borrowing from the Bank Term Funding Program, or BTFP, in the week through Dec. 27. That compares to a previous all-time high of $131 billion, reached in the week ended Dec. 20.