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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.