Since we started announcing the TAF program, we have seen many of the interest rate spreads narrow appreciably. Now, I'm not saying the TAF was the only reason that's occurred, but I think it was a contributing factor in that.
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So far, the TAF auctions have given banks access to "relatively low cost funding," at rates that are higher than the federal funds rate but lower than the Fed's discount rate. "It was reasonable rates that these transactions occurred at," Rosengren said, adding that TAF participants could use "assets that are temporarily, or at least hopefully temporarily, illiquid and that they would prefer not to sell at this time."
From remarks as delivered, as reported by Market News International