Fed likely to end bank funding programme

Shutting down: Fed chairman Jerome Powell at a conference in Washington. The central bank is expected to close a programme that allows banks and credit unions to borrow funds for up to one year, pledging US treasuries and agency debt as collateral. — AFP

NEW YORK: The growing gap between the rate on the US Federal Reserve’s (Fed) nascent funding facility and what the central bank pays institutions parking reserves suggests officials will let the programme expire in March, according to Wrightson ICAP.

The Fed introduced the Bank Term Funding Programme (BTFP) earlier this year as the banking crisis roiled markets.