The Federal Reserve will hold its next $50 billion Term Auction Facility auction of short-term liquidity Monday morning, and announce the results Tuesday, the Fed announced Monday.

Bids will be accepted from 11 a.m. to 1 p.m. on April 7 for part of the $50 billion TAF the Fed is offering to promote borrowing in short-term funding markets. The 28-day loans will mature on May 8.



The minimum bid has been set at $5 million, with bid increments set at $100,000. Maximum bids will be limited to $5 billion per institution, and the minimum bid rate has been set at 2.11%.

Participants must submit bids by phone to their local Federal Reserve bank between the opening and closing time listed. Results will be announced April 8 at approximately 10 a.m.

The auction facility, or TAF, was introduced in December 2007 as a way for banks to gain access to cheaper, less restrictive short-term credit.

Borrowing between banks tightened following the subprime mortgage meltdown in the late summer and fall of last year. The TAF is a new Fed tool to encourage banks to lend to each other more freely.

This auction is the ninth in the series of offerings, with the next auction scheduled for April 21.

By Michelle Donahue, edited by Steve Campbell and Cristina Markham