Fed awards $66.82 billion in term deposits

NEW YORK (Reuters) - The Federal Reserve said on Thursday it awarded $66.82 billion of seven-day term deposits to 43 banks at an auction held earlier in a periodic test of this program.

The central bank will pay an interest rate set to the sum of the interest rate paid on excess reserves plus a fixed spread of 1 basis point on the deposits. The Fed currently pays an interest rate of 50 basis points on excess reserves.

These floating rate term deposits will settle on Thursday and mature on May 26.

The term deposit facility is one of the tools the Fed has said it will use to reduce cash in the banking system to achieve its interest rate target.

Reporting by Richard Leong; Editing by Diane Craft