Demand for Fed Funding Tool Hits Record Before Rate Hike
- Officials raised cost to borrow from Bank Term Funding Program
- Bank demand for tool climbs to fresh record at $167.8 billion
The Marriner S. Eccles Federal Reserve building in Washington, DC.
Photographer: Al Drago/BloombergThis article is for subscribers only.
Borrowing from a Federal Reserve emergency lending program rose to a fresh record, just before the central bank raised the facility’s interest rate to stop financial institutions from taking advantage and arbitraging on its attractive terms.
Demand for the Bank Term Funding Program rose approximately $6.3 billion in the week through Wednesday, Jan. 24 to an all-time high of $167.8 billion, data from the Fed showed. Borrowing has jumped by more than $50 billion since mid-November after the program’s rate increasingly fell below the rate at which institutions could earn money by parking reserves at the Fed.