optimusprime_IHB
New member
<a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3wcCqRA_.RM">Fed Funds Rise Most Over Target in Decade as Banks Hoard Cash</a>
By Liz Capo McCormick
Sept. 15 (Bloomberg) -- The rate for overnight loans between banks soared to its greatest margin over the Federal Reserve's target rate in at least a decade as banks hoard cash after Lehman Brothers Holdings Inc.'s bankruptcy.
Fed funds traded as high as 6 percent, or 4 percentage points above the Fed's target, according to ICAP Plc, the world's largest inter-dealer broker. The difference is the greatest since Bloomberg began tracking the data in 1998.
The central bank uses repurchase agreements, or repos, to temporarily buy or sell Treasury, mortgage-backed and so-called agency debt for a set period, to help maintain enough money in the system to keep overnight interest rates close to the target. They don't signal a policy shift. Futures show traders boasted odds to 54 percent that the Fed will cut rates when policy makers meet tomorrow to offset financial market turmoil.
``If the fed funds rate closes high today, I would be really worried as it would mean that there really is no money out there to be lent,'' said Stan Jonas, who trades interest- rate derivatives at Axiom Management Partners LLC in New York.
By Liz Capo McCormick
Sept. 15 (Bloomberg) -- The rate for overnight loans between banks soared to its greatest margin over the Federal Reserve's target rate in at least a decade as banks hoard cash after Lehman Brothers Holdings Inc.'s bankruptcy.
Fed funds traded as high as 6 percent, or 4 percentage points above the Fed's target, according to ICAP Plc, the world's largest inter-dealer broker. The difference is the greatest since Bloomberg began tracking the data in 1998.
The central bank uses repurchase agreements, or repos, to temporarily buy or sell Treasury, mortgage-backed and so-called agency debt for a set period, to help maintain enough money in the system to keep overnight interest rates close to the target. They don't signal a policy shift. Futures show traders boasted odds to 54 percent that the Fed will cut rates when policy makers meet tomorrow to offset financial market turmoil.
``If the fed funds rate closes high today, I would be really worried as it would mean that there really is no money out there to be lent,'' said Stan Jonas, who trades interest- rate derivatives at Axiom Management Partners LLC in New York.
