InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Fed issues final rules related to rate decreases
On August 12, the Federal Reserve Board (Fed) published two final rules following its July 31 decision to lower the target range for the federal funds rate to 2 - 2.25 percent. These rules affect the primary and secondary credit available to depository institutions as a short-term backup source of funding, as well as reserve requirements that depository institutions must meet.
A final rule amending Regulation A (Extensions of Credit by Federal Reserve Banks) was issued to reflect the Fed’s approval of a one-quarter percent decrease, from 3 percent to 2.75 percent. Additionally, because the formula for the secondary credit rate incorporates the primary rate, the secondary credit rate also decreased by one-quarter percentage point, from 3.50 percent to 3.25 percent. The amendments are effective August 12, with rate changes for primary and secondary credit applicable on August 1.
A second final rule amending Regulation D (Reserve Requirements of Depository Institutions) was issued to reflect approval of a one quarter percent decrease to the rate of interest paid on balances maintained to satisfy reserve balance requirements (IORR), along with the rate of interest paid on excess balances (IOER) maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final rule specifies that both the IORR and the IOER are 2.10 percent. The amendments are effective August 12, with IORR and IOER rate changes applicable on August 1.
Federal Reserve issues final rules reflecting credit and interest rate increases
On January 31, the Federal Reserve Board (Fed) published a final rule amending Regulation A (Extensions of Credit by Federal Reserve Banks) to reflect its December 19 approval of a one-quarter percent increase, from 2.75 percent to 3 percent. Additionally, because the formula for the secondary credit rate incorporates the primary rate, the secondary credit rate also increased by one-quarter percentage point, from 3.25 percent to 3.5 percent. The rate changes took effect on January 31, but were applicable on December 20, 2018.
The same day, the Fed also issued a final rule amending Regulation D (Reserve Requirements of Depository Institutions) to reflect approval of a 0.20 percentage point increase to the “rate of interest paid on balances maintained to satisfy reserve balance requirements (“IORR”) and the rate of interest paid on excess balances (“IOER”), both now at 2.4 percent, maintained at Federal Reserve Banks by or on behalf of eligible institutions.” The rate changes took effect on January 31, but were applicable on December 20.
Federal Reserve issues final rules reflecting credit and interest rate increases
On June 20, the Federal Reserve issued a final rule amending Regulation A (Extensions of Credit by Federal Reserve Banks) to reflect its June 14 approval of a one-quarter percent increase in the primary credit rate at each Federal Reserve Bank. Because the formula for the secondary credit rate references the primary rate, the secondary credit rate also increased by one-quarter percentage point.
The same day, the Federal Reserve also issued a final rule amending Regulation D (Reserve Requirements of Depository Institutions) to reflect its June 14 approval of a one-quarter percent increase to the “rate of interest paid on balances maintained to satisfy reserve balance requirements (IORR) and the rate of interest paid on excess balances (IOER) maintained at Federal Reserve Banks by or on behalf of eligible institutions.”
Federal Reserve Issues Final Rules Reflecting Credit and Interest Rate Increases
On December 20, the Federal Reserve Board (Fed) issued a final rule amending Regulation A (Extensions of Credit by Federal Reserve Banks) to reflect its December 13 approval of a one-quarter percent increase in the primary credit rate at each Federal Reserve Bank. Additionally, because the formula for the secondary credit rate references the primary rate, the secondary credit rate also increased by one-quarter percentage point. The rate changes took effect on December 14, and the final rule became effective on December 20.
The same day, the Fed also issued a final rule amending Regulation D (Reserve Requirements of Depository Institutions) to reflect its December 13 approval of a one-quarter percent increase to the “rate of interest paid on balances maintained to satisfy reserve balance requirements (“IORR”) and the rate of interest paid on excess balances (“IOER”) maintained at Federal Reserve Banks by or on behalf of eligible institutions.” The rate changes took effect on December 14, and the final rule became effective on December 20.