NEW YORK: The Federal Reserve said on Thursday it will hold a seven-day term deposit facility operation on Dec. 3 in an ongoing test of this program.
The term deposit facility is one of the tools the Fed has said it will use to reduce cash in the banking system to achieve its interest rate target.
The operation will offer floating-rate term deposits with the maximum individual award amount set at $5 billion, and the rate set equal to the sum of the interest rate on excess reserves plus a fixed spread of 1 basis point.
The interest on excess reserves is currently 25 basis points.
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