MNI BRIEF: Fed Says Bank Term Funding Program To End In March
Fed adjusts BTFP interest rate to not be lower than the IORB rate.
The Federal Reserve Board Wednesday announced that its Bank Term Funding Program will cease making new loans as scheduled on March 11, and adjusted the program's interest rate higher for loans made before the deadline.
The Fed announced effective immediately the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made. "This rate adjustment ensures that the BTFP continues to support the goals of the program in the current interest rate environment," the Fed said in a statement. The program was established last year as an emergency measure during the banking crisis and has seen demand surge in recent weeks as the cost of new BTFP loans plunged along with market rates.
After March 11 banks and other depository institutions will continue to have ready access to the discount window to meet liquidity needs, the statement said.