Release Date: May 14, 2015
The Federal Reserve plans to continue periodic testing of Term Deposit Facility (TDF) operations, beginning with two operations this month. 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.
The first two operations will be conducted on May 21 and May 28 and will offer 14-day and 7-day term deposits, respectively. These operations will each offer floating-rate term deposits with the maximum individual award amount set at $5 billion, and the rate set equal to the sum of the interest rate on excess reserves (currently 25 basis points) plus a fixed spread of 1 basis point. Term deposits offered in these two operations will include an early withdrawal feature and settle on the same day each operation is executed. Complete details will be announced on the day prior to each operation on the Board’s website. The Federal Reserve plans to conduct similar routine TDF test operations in the coming months. The schedule and terms for future operations will be announced at later dates.
Additional information, including the steps that institutions must complete to be eligible to participate in term deposit operations are available at http://www.frbservices.org/centralbank/term_deposit_facility.html .