The rate of interest paid on depository institutions’ reserve balances at Federal Reserve Banks and the rate banks pay on Reserve Bank primary credit have both risen 25 basis points (bps) as a result of recent action on the Federal Reserve’s federal funds target rate.
The Federal Open Market Committee on Feb. 1 increased the federal funds target rate 25 bps to a range of 4.5% to 4.75%. The reserve balance interest rate and primary credit rate changes took effect Feb. 2, the Fed said in notices published Wednesday in the Federal Register.
With these changes, the applicable rates of interest on reserve balances (IORB) and primary credit have risen to 4.65% and 4.75%, respectively. The secondary credit rate, which changes automatically with primary credit rate changes, also rose to 5.25%, the Fed said.
The changes are reflected in revisions to the Fed’s Regulation D and Regulation A.