Regulation D: Reserve Requirements of Depository Institutions
Published Date: 1/15/2025
Rule
Summary
Starting January 15, 2025, banks and similar institutions will earn a slightly lower interest rate of 4.4% on their money held at Federal Reserve Banks, down by 0.25%. This change helps keep short-term interest rates steady and supports the Federal Reserve’s goals. The new rate actually kicked in on December 19, 2024, so eligible institutions should already see the update in action.
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
IORB cut for eligible institutions
If you are an eligible depository institution, the interest rate paid on balances held at Federal Reserve Banks (IORB) is set to 4.4 percent, a 0.25 percentage point decrease from the prior 4.65 percent. The rule is effective January 15, 2025, and the IORB rate change was applicable on December 19, 2024.
IORB supports federal funds target
The Board adopted the 4.4 percent IORB rate to enhance IORB's role in maintaining the federal funds rate within the FOMC target range of 4.25 percent to 4.50 percent. The Board announced the rate on December 18, 2024, made it applicable on December 19, 2024, and the rule is effective January 15, 2025.
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