Federal Reserve auctions $30bn

by Richard Kilner

Story link: Federal Reserve auctions $30bn

Yesterday the Federal Reserve declared that it had auctioned $30bn in funds to commercial banks, in a move designed to alleviate the continuing credit crisis.

The auction is the latest in a series of similar moves made by the US central bank since the credit crunch began aimed at increasing the amount of capital in the US banking system.

Five auctions, including the most recent, have been set up by the Federal Reserve and have, in total, injected $130bn into the banking system.

Since the first auction the interest rates generated by the auctions have fallen from 4.65% for the first down to 3.01% for the most recent.

The declining rates are seen as a positive sign by industry analysts.

A sixth auction is planned for this month, and is expected to be held on 25 February and offer another $30bn.