January 3, 2018 / 9:31 PM / 2 years ago

UPDATE 1-U.S. tax-free money fund interest rates rise above 1 pct - iMoneyNet

(Releads, adds details on latest data)

NEW YORK, Jan 3 (Reuters) - The average interest rate on U.S. tax-free money market funds broke the 1 percent barrier in the latest week, making it higher than the average rate offered by taxable money funds, the Money Fund Report said on Wednesday.

The seven-day simple yield on tax-free and municipal money-market funds averaged 1.03 percent in the week ended Jan. 2, up from 0.79 percent the previous week, according to the report, published by iMoneyNet.

This was above the average seven-day simple yield for taxable money funds iMoneynet tracks, which increased to 0.92 percent from 0.89 percent the week before.

Less than a handful of taxable and tax-free money funds offered interest rates in the 1.50 percent area in the latest week as short-term U.S. interest rates have been rising in anticipation of further rate hikes from the Federal Reserve in 2018.

Meanwhile, total money fund assets grew for a second straight week.

U.S. money fund assets increased by $4.79 billion to $2.806 trillion in the week ended Jan 2.

Taxable money market fund assets increased by $4.66 billion to $2.675 trillion, while tax-free assets increased by $130.80 million to $131.06 billion.

Reporting by Richard Leong; Editing by Susan Thomas

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