Fed To Scale Back Liquidity Programs

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The Federal Reserve announced Thursday that it will scale back some of the programs it has been using to improve liquidity in the market in the wake of the financial crisis.

Specifically, the Fed revealed that it is going to pull back on its Term Auction Facility and its Term Securities Lending Facility in the coming months.

In announcing schedules for TAF and TSLF auctions, which are used to help the Fed expand its liquidity operations, the central bank announced that it would reduce TAF amounts offered under the current cycle of 84-day funds from $75 billion to $50 billion by October and $25 billion by November and December. The Fed will, however, continue of offer $75 billion per each 28-day auction, though reductions in those funds will continue next year.

The Fed will also reduce the TSLF offerings for its monthly auctions from $75 billion to $50 billion in October and further to $25 billion for November and December.

The central bank made its decision to reduce the amount of funds offered because of improved conditions in short term markets and secured financial markets.

It was also announced that the Fed will begin to examine whether it should make the TAF program permanent and will also request public comment on the matter.

The Federal Reserve announced Thursday that it will scale back some of the programs it set up in the wake of the financial crisis to improve liquidity in the market. Specifically, the Fed revealed is going to pull back on its Term Auction Facility and its Term Securities Lending Facility in the coming months. (Market News Provided by RTTNews)