Federal Reserve auctions another $50bn to help loosen credit markets

by Richard Kilner

Story link: Federal Reserve auctions another $50bn to help loosen credit markets

Yesterday the US Federal Reserve disclosed the results of its eight auction of short-term loans, worth $50bn.

The interest rate offered was 2.615%, the lowest of any of the auctions held thus far, and seen as a positive sign, and bids were offered for $88.9bn of loans.

Since the credit crunch began, the Fed has pumped $260bn into the market in an effort loosen up the tightening credit markets.

Apprehensive banks have grown wary of lending to one another, causing the credit markets to become tight.

With some analysts fearing a potential recession could be serious, the central bank is eager to do all it can to prevent disaster if possible, and lessen its worst effects if unavoidable.