View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Advanced

Search
About
the Fed

News
& Events

Monetary
Policy

Supervision
& Regulation

Payment
Systems

Economic
Research

Data

Consumers
& Communities

Board of Governors of the Federal Reserve System
The Federal Reserve, the central bank of the United States, provides the nation with a
safe, flexible, and stable monetary and financial system.

Home > News & Events > Press Releases

Press Release
October 22, 2008

Federal Reserve announces it will alter the
formula used to determine the interest rate paid
to depository institutions on excess balances
For release at 10:00 a.m. EDT
Share

The Federal Reserve Board on Wednesday announced that it will alter
the formula used to determine the interest rate paid to depository
institutions on excess balances.
Previously, the rate on excess balances had been set as the lowest
federal funds rate target established by the Federal Open Market
Committee (FOMC) in effect during the reserve maintenance period
minus 75 basis points. Under the new formula, the rate on excess
balances will be set equal to the lowest FOMC target rate in effect
during the reserve maintenance period less 35 basis points. This
change will become effective for the maintenance periods beginning
Thursday, October 23.
The Board judged that a narrower spread between the target funds rate
and the rate on excess balances at this time would help foster trading in
the funds market at rates closer to the target rate. The Board will
continue to evaluate the appropriate setting of the rate on excess
balances in light of evolving market conditions and make further
adjustments as needed.

Last Update: October 22, 2008

BOARD OF GOVERNORS
of the FEDERAL
RESERVE SYSTEM
About the Fed
News & Events
Monetary Policy
Supervision & Regulation
Payment Systems
Economic Research
Data
Consumers & Communities
Financial Stability

TOOLS AND
INFORMATION

STAY CONNECTED

Contact
Publications
Freedom of Information (FOIA)
Office of Inspector General
Budget & Performance | Audit
No FEAR Act
EspaƱol
Website Policies | Privacy
Program
Accessibility

BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM
20th Street and Constitution Avenue N.W., Washington, DC 20551