Central Banks
Fed Raises Rate on Emergency Loan Program to Stop Arbitrage
- Bank Term Funding Program will expire on March 11 as planned
- Banks will see higher rates to borrow effective immediately
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The Federal Reserve raised the interest rate on loans to banks issued under an emergency lending program launched last year, after borrowing surged in recent weeks as institutions took advantage of the attractive financing terms.
The Fed’s Bank Term Funding Program, unveiled during the regional banking crisis to ease stress in the financial system, will not be extended beyond its March 11 deadline, top officials had signaled earlier this month.