Optimistic Shift in U.S. Economic Outlook Despite Ongoing Challenges The Federal Reserve’s emergency lending program, the Bank Term Funding Program (BTFP), witnessed a surge in demand, reaching a record $167.8 billion in borrowing as of January 24. This spike, approximately $6.3 billion higher than the previous week, came just before the Fed raised the program’s interest rate to prevent financial institutions from exploiting its favorable terms for arbitrage. Initially, the BTFP’s borrowing rate of around 4.88% was significantly lower than the rate for parking reserves at the Fed, leading to a risk-free arbitrage opportunity for institutions. However, this loophole was closed with the Fed’s decision to align the BTFP borrowing rate with that of reserve balances, effectively ending the advantageous trade. « Previous Article Next Article » Share This Article Choose Your Platform: Facebook Twitter Google Plus Linkedin Related Posts Expect Continued High Interest Rates as Fed Seeks More Progress on Inflation READ MORE Crude Oil's Upward Momentum Stalls Amid Signs of Overbought Market READ MORE Analysts Predict Further Gains for Precious Metals Amid Strong Chinese Demand READ MORE Wealthy Asian Investors Propel Gold Demand During Jewelry Slump READ MORE Yuan Undercuts Dollar: A Shift in Global Currency Dynamics READ MORE Add a Comment Cancel replyYour email address will not be published. Required fields are marked *Name * Email * Save my name, email, and website in this browser for the next time I comment. Comment