Fed Raises Interest Rate Paid For Excess Bank Reserves

From Fox Business:

WASHINGTON -- The Federal Reserve on Wednesday raised the interest rate that it pays to banks who keep excess reserves at the central bank. The new rate will be the federal funds target rate less 0.35 percentage points. The old formula was the fed funds rate less 0.75 percentage points. The Fed said that the narrower spread "would help foster trading in the funds market at rates closer to the target rate." The Fed said it would make further adjustments to the rate as needed.

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Sources :

Fox Business: Fed Raises Interest Rate Paid For Excess Bank Reserves, October 22, 2008

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