In The News: The Fed is Lending
The Takeaway: There has been an increase in Fed lending to financial institutions. As the Fed increases interest rates, liquidity decreases. Some financial institutions will face challenges as money becomes scarce. The Fed is the lender of last resort, and therefore will step in when needed. Recent data indicates that there is an increase in loans issued by the Fed to financial institutions. Nothing to worry about at this time, but something to keep an eye on.
Primary credit is a lending program available to depository institutions that are in generally sound financial condition. Primary credit is available in terms from overnight to 28 days. In extending primary credit, Reserve Banks must judge that the borrower is likely to remain eligible for primary credit for the term of the loan.
