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Board of Governors of the Federal Reserve System
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Federal Reserve Board of Governors

Interest on Required Balances and Excess Balances

The Federal Reserve Banks pay interest on required reserve balances and on excess reserve balances. The Board of Governors has prescribed rules governing the payment of interest by Federal Reserve Banks in Regulation D (Reserve Requirements of Depository Institutions, 12 CFR Part 204).

The Financial Services Regulatory Relief Act of 2006 authorized the Federal Reserve Banks to pay interest on balances held by or on behalf of depository institutions at Reserve Banks, subject to regulations of the Board of Governors, effective October 1, 2011. The effective date of this authority was advanced to October 1, 2008, by the Emergency Economic Stabilization Act of 2008.

The interest rate on required reserves (IORR rate) is determined by the Board and is intended to eliminate effectively the implicit tax that reserve requirements used to impose on depository institutions. The interest rate on excess reserves (IOER rate) is also determined by the Board and gives the Federal Reserve an additional tool for the conduct of monetary policy. According to the Policy Normalization Principles and Plans adopted by the Federal Open Market Committee (FOMC), during monetary policy normalization, the Federal Reserve intends to move the federal funds rate into the target range set by the FOMC primarily by adjusting the IOER rate. Specifically, when economic conditions warrant the commencement of policy firming, the Federal Reserve intends to set the IOER rate equal to the top of the target range for the federal funds rate.

The Board will continue to evaluate the appropriate settings of the interest rates on reserve balances in light of evolving market conditions and will make adjustments as needed.

Interest rates on reserve balances are provided in the table below. The table is generally updated daily at 4:30 p.m., Eastern Time, with the current day's rates, unless it's a federal holiday, in which case the table will be updated the following business day at 4:30 p.m.

Interest Rates on Reserve Balances for November 27, 2015
Last Updated: November 27, 2015 at 4:30 p.m., Eastern Time
Rate on Required Reserves (IORR rate) 0.25 12/16/2008
Rate on Excess Reserves (IOER rate) 0.25 12/16/2008

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Last update: November 27, 2015