Fed could test term deposit offerings in June

The US Federal Reserve said on Monday it could begin the first of its Term Deposit Facility offerings on a small scale as early as mid-June. The Fed said in a statement it will make up to five small-value term deposit offerings in coming months. The Fed has not defined the size of the offerings. The offerings are aimed at testing the new facility and to familiarise banks with the process.
They have no implications for the near-term conduct of monetary policy, the Fed said in a statement. Term deposits will be similar to certificates of deposit in which bank customers park funds for a set period of time to earn a specific interest rate. When fully operational, the Fed has said it will use the term deposit facility to drain some of the massive amounts of reserves it has pumped into the financial system to buoy the US economy through a withering financial crisis and deep recession.