Fed TDF testing continues

The Federal Reserve has announced plans to continue its previously announced periodic testing of the Term Deposit Facility (TDF) with one operation in May 2019. 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 TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. On May 30, 2019, the Federal Reserve will conduct a floating-rate offering of term deposits with an early withdrawal feature through its TDF. Seven-day term deposits will be offered, with a rate set equal to the sum of the interest rate paid on excess reserves plus a fixed spread of 1 basis point. The maximum tender amount per institution will be $250,000,000. The operation window will be open from 10:30 a.m. to 12:30 p.m. EDT, and awarded deposits will settle the same day the operation is executed. Additional information, including the steps that institutions must complete to be eligible to participate in term deposit operations, is available.