(Adds background, graphic)
NEW YORK, Dec 26 (Reuters) - U.S. money market fund assets increased for a third straight week, as investors have raised their cash holdings near year-end after steep losses on Wall Street due to worries about slowing U.S. growth and turmoil in Washington, a private report showed.
Assets of money market funds, which are seen as nearly as safe as bank accounts, were up $4.70 billion to $2.971 trillion in the week ended Dec. 25, the Money Fund Report said on Wednesday.
Three weeks earlier, money fund assets surged by $87.04 billion, marking the third biggest increase since Money Fund began tracking weekly flows in 1998.
Taxable money market fund assets climbed by $3.13 billion to $2.827 trillion, while tax-free assets rose by $1.58 billion to $144.23 billion, according to the report, published by iMoneyNet.
Most money funds have grown more compelling to investors as their yields have risen with the Federal Reserve’s rate increases.
“It’s a real alternative now to sit in cash,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.
A week ago, the U.S. central bank raised key short-term lending rates by a quarter-point to 2.25-2.50 percent, the fourth rate increase in 2018. Fed officials signaled they expected two more rate hikes in 2019, down from the three hikes they projected in September.
Interest rates futures implied traders do not expect the Fed would not raise rates next year.
iMoneyNet said the seven-day simple yield on taxable money-market funds averaged at 1.98 percent, up from 1.91 percent last week, while the average seven-day simple Yield for tax-free and municipal money-market funds averaged 1.25 percent, higher than 1.22 percent last week.
Reporting by Richard Leong Editing by Tom Brown