Fed to Continue Testing Term Deposit Facility Operations in August

       

WASHINGTON—The Federal Reserve plans additional tests for one of the tools it intends to eventually use to raise short-term interest rates, the U.S. central bank said Monday.
        The Fed said test operations of its Term Deposit Facility, which aims to drain reserves from the banking system, will be conducted Thursday and Aug. 13. Full details will be announced a day before each operation, and similar tests are planned "in the coming months," the Fed said in a statement.
        "These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures," the Fed said. "The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy."
        The Fed plans to use various tools—primarily the interest rate on excess reserves, but also an overnight reverse repo facility and secondary tools like the TDF—to tighten policy when the Federal Open Market Committee decides to raise the benchmark federal-funds rate, which has been pinned near zero since December 2008. Most Fed officials have said they expect to begin raising rates this year, and the FOMC's next meeting is scheduled for Sept. 16-17.
        Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
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        (END) Dow Jones Newswires

        August 03, 2015 14:50 ET (18:50 GMT)

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