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Fed auctions $75 bln to banks to ease credit crunch

MNB

The US Federal Reserve said it auctioned another $75 billion in short-term loans to cash-strapped banks to help ease credit stresses.

This was the central bank's 12th auction aimed at injecting more money into the US banking system since mid-December 2007, when the Fed established its Term Auction Facility to deliver short-term funds to banks that are in need of liquidity.

The series of auctions so far have pumped $510 billion into the banking system.

The latest auction produced an interest rate of 2.100%, lower than the rate of 2.220% generated in the previous one, which was held on May 6 and provided $75 billion to banks.

On May 2, the Fed announced it was boosting the amount of loans auctioned to commercial banks to $150 billion in May, up from the $100 billion in April, continuing its efforts to deal with the effects of a credit crisis.

The US central bank is expected to focus more on loan auctions and other efforts to help banks and investment firms overcome any credit problems after having cut interest rates aggressively since last September. (Xinhua)

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