Advertisers rush to save money with the Fed after the tweak interest rate
Advertisers kept more money in the nightclubs in the Federal Reserve on Thursday, as the central bank began paying interest rates so as not to damage other parts of the U.S. financial markets.
The change, which was announced after his financial meeting on Wednesday, came in response to complaints from currency market finance as well as banks that have struggled to find a place with good yields.
About 70 people in the market stopped $ 756bn from the Fed through its restitution program, according to data from a major bank branch in New York.
That’s about $ 172bn more than the previous week’s history, and $ 235bn more than on Wednesday, with only 53 groups linking the venue.
“The dramatic increase in spending reflects the lack of hunger for income” in short-term loans, said Gennadiy Goldberg in TD Securities.
The Fed has said it is increasing its RRP volume to 0.05% from zero to help “improve short-term financial markets”, one of which changed technology Wednesday. It also raised interest rates paid in deposits, held in the Fed by banks, from 0.1% to 0.15%.
Due to the U.S. economy and economic situation, money has been pouring into the stock market which has kept the security of the state for some time. Increased demand for securities has sometimes led to lower yields at zero this year and threatened a $ 4tn trading potential.
The amount of money that investors exchange the Treasury with some of the best in the repo market – another major source of income in the stock market – has also plummeted.
The third change Wednesday helped raise the prices to a much lower level. Federal funds, the Fed’s main operating rate, also rose to 0.08%, close to the central bank’s 0 to 0.25%, which fell earlier this year to 0.04%.
Jay Powell, Fed chairman, is explained not to worry about the amount of RRP work at his press conference after the meeting, showing that it works as he wants it to.
“We think the repo repository is doing what it is supposed to do, and investing in the stock market and making the federal funds run smoothly.”
Scott Skyrm, a repo seller at Curvature Securities, said the changes announced Wednesday will help the margin but the need for RRP should continue. The Fed’s commitment to buying $ 120bn of government debt each month to boost the economy continues to widen the gap between the amount of money that homes are looking for and the amount of securities to buy, he said.
John Canavan, a researcher at Oxford Economics, said the growth in RRP spending on Thursday was surprising.
“This should not be the end of this increase, and there is a possibility that an inflationary pressure will push the demand for RRP beyond $ 1tn at some point.”