Release Date: April 13, 2015
For release at 11:30 a.m. EDT
The Federal Reserve Board on Monday requested public comment on proposed amendments to Regulation D (Reserve Requirements of Depository Institutions) making technical changes to the calculation of interest payments on certain balances maintained by depository institutions at Federal Reserve Banks. The proposed amendments are a matter of prudent planning and have no implications for the near-term conduct of monetary policy.
Currently, if the rate of interest paid on excess balances (the IOER rate) were to be changed in the middle of a two‑week reserve maintenance period, the change would not be fully reflected in the interest payments to depository institutions until the beginning of a new maintenance period. The Board proposes to amend Regulation D so that interest payments to depository institutions with excess balances are based on the IOER rate in effect each day and the level of balances held each day, rather than the average IOER rate and average level of excess balances over the maintenance period.
The proposed change is intended to enhance the effectiveness of changes in the IOER rate in moving the federal funds rate into the target range established by the Federal Open Market Committee when changes in those rates do not coincide with the beginning of a maintenance period.
Comments on the proposal are requested within 30 days of publication in the Federal Register, which is expected shortly.
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