Interest on Reserve Balances (IORB) Rate
Interest on Reserve Balances (IORB) rate is the interest rate that the Federal Reserve pays on the reserve balances held by banks and other depository institutions at the Federal Reserve. The IORB rate is set by the Federal Open Market Committee (FOMC) and is used to influence the money supply and the level of economic activity in the United States. The IORB rate is also used to control inflation and to maintain the stability of the financial system.
History of Interest on Reserve Balances (IORB) Rate
The IORB rate was first established in 2003 as part of the Federal Reserve’s efforts to increase the transparency of its monetary policy. Prior to 2003, the Federal Reserve had used a variety of methods to influence the money supply, including open market operations, discount window lending, and reserve requirements. The IORB rate was introduced as a way to provide a more direct and transparent way to influence the money supply.
The IORB rate is set by the FOMC and is used to influence the money supply and the level of economic activity in the United States. The IORB rate is also used to control inflation and to maintain the stability of the financial system. The IORB rate is typically set at a level that is slightly higher than the federal funds rate, which is the rate at which banks lend to each other overnight.
Table of Comparisons
| Interest Rate | Description |
|---|---|
| IORB Rate | Interest rate paid on reserve balances held by banks and other depository institutions at the Federal Reserve. |
| Federal Funds Rate | Rate at which banks lend to each other overnight. |
Summary
Interest on Reserve Balances (IORB) rate is the interest rate that the Federal Reserve pays on the reserve balances held by banks and other depository institutions at the Federal Reserve. The IORB rate is set by the Federal Open Market Committee (FOMC) and is used to influence the money supply and the level of economic activity in the United States. The IORB rate is also used to control inflation and to maintain the stability of the financial system. For more information about the IORB rate, please visit the Federal Reserve’s website or consult with a financial advisor.
See Also
- Federal Funds Rate
- Open Market Operations
- Discount Window Lending
- Reserve Requirements
- Monetary Policy
- Money Supply
- Inflation
- Financial System Stability
- Federal Reserve
- FOMC
