Bloomberg News

Fed Funds Projected to Open at 0.16% to 0.18%, ICAP Says

June 18, 2012

Fed funds, the U.S. overnight inter- bank lending rate, is projected to open in a range of 0.16 percent to 0.18 percent, within the Federal Reserve’s target range of zero to 0.25 percent.

Fed funds closed at 0.18 percent on June 15 after trading from 0.13 percent to 0.2 percent and averaging 0.18 percent, according to ICAP Plc, the world’s largest inter-dealer broker.

The Fed will hold two separate permanent open market operations of U.S. debt today as part of its plan to replace $400 billion of short-term debt in its portfolio with longer- term Treasuries to reduce borrowing costs further and counter rising risks of a recession.

Beginning at 10:15 a.m. New York time, the central bank will sell Treasuries due from May 2013 to November 2013. The Fed plans to sell $8 billion to $8.75 billion of the securities today, according to the New York Fed’s website. This operation will close at 11 a.m.

Starting at 1:15 p.m. and ending at 2 p.m., the Fed will acquire Treasuries maturing from February 2036 to May 2042. The central bank will purchase from $1.5 billion to $2.25 billion of Treasuries in this maturity range.

To contact the reporter on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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