Fed Effective Gives Nod to Bank’s Ability to Lift Rates
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Federal funds are trading at the highest level in a year as the central bank raises a key reverse repo rate, suggesting to analysts the tool will enable policy makers to eventually lift borrowing costs.
Fed funds, the U.S. overnight rate for borrowing and lending of cash between banks, opened yesterday at 0.10 percent, the highest since Jan. 7, according to ICAP Plc data. It was 0.09 percent today. The volume weighted average, known as the effective rate, for these transactions rose to 0.11 percent on Nov. 18, the most since October 2013, after being at 0.09 percent all but eleven days since July 1, according to New York Fed data.