Federal Reserve Board Revises Bank Reserve Interest Rate

The Federal Reserve Board ("FRB") revised the interest rate paid on balances ("IORB") held by Federal Reserve Banks or eligible institutions.

In the final rule, the FRB states that the revised interest rate on reserve balances is 0.40 percent, a 0.25 percentage point increase from its previous level. The FRB expects that the amended rate will enhance the role of IORB in maintaining federal funds rates in the target range established by the Federal Open Market Committee. The new interest rate became effective on March 17, 2022.