TAF auctions hint at liquidity improvement

The results of the latest term auction facility (TAF), the mechanism launched by the Federal Reserve in December to provide short-term funds to banks through the worst of the liquidity drought, have offered indications that the funding situation in the US is improving.

At the most recent auction, held on May 19, the stop-out rate - the lowest interest rate bid the Fed accepted from a bank wanting funds - reached a low of just 2.1%. More significantly, the bid was just 11 basis points above the 1

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