Fed Trims Bank Deposit Interest: Loans and Savings Feel the Pinch
Published Date: 12/19/2025
Rule
Summary
Starting December 19, 2025, banks and similar institutions will earn a slightly lower interest rate of 3.65% on their money held at Federal Reserve Banks, down by 0.25%. This change helps keep the federal funds rate steady, which affects how much it costs to borrow money. If you’re a bank or credit union, this update impacts your earnings and how you manage your reserves.
Analyzed Economic Effects
1 provisions identified: 0 benefits, 1 costs, 0 mixed.
IORB Rate Lowered to 3.65%
The Federal Reserve set the interest rate paid on reserve balances (IORB) at 3.65 percent, a 0.25 percentage point decrease from the prior 3.90 percent. The rule is effective December 19, 2025, and the rate change was applicable on December 11, 2025. If you run a bank, credit union, or similar depository institution, this reduces the interest you earn on balances held at Federal Reserve Banks and affects how you manage reserves.
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Key Dates
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