Following aggressive rate cuts, the Federal Reserve provided $30 billion to commercial banks in the fifth such auction since December.
The Federal Reserve, seeking to combat the effects of a serious credit crisis, said Tuesday it had auctioned $30 billion in funds to commercial banks at an interest rate of 3.010%.
It marked the fifth in a series of auctions that so far have pumped $130 billion in money into the nation's banking system in an effort to provide cash-strapped banks with extra reserves. The Fed's hope is that the increased resources will keep banks lending and prevent a severe credit
squeeze from making the current economic slowdown worse.
The latest auction results showed that the Fed's effort is having success. The 3.010% interest rate is the lowest rate for any of the five auctions held so far. It was slightly below the previous auction where the interest rate had been 3.123%.
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