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A comment on Federal Reserve Now Projects Rate Increases in 2023 as Economy Heals. Parent comment

Re:Federal Reserve Now Projects Rate Increases in 2023 as Ec... by KyleBrandt on Wednesday June 16, 2021 @04:16PM (#27532975)
My current understanding is that the reserve rate is now 0% https://www.federalreserve.gov/monetarypolicy/reservereq.htm , so it can all be loaned out.
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Re:Federal Reserve Now Projects Rate Increases in 2023 as Ec... by woodruffw on Wednesday June 16, 2021 @05:05PM (#27533459)
Yeah. My operating assumption was that the 0% rate was an emergency maneuver by the Fed to increase liquidity at the very beginning of COVID, but it's not clear when (if at all) they plan on returning to a nonzero reserve rate.

OTOH, the Fed has other mechanisms for encouraging bank reserves -- I believe they still pay interest on any excess reserves that banks hold at the end of each day. That rate (the "IOER rate") is (still) significantly higher[1] than the federal funds rate[2], so banks can essentially collect free money by keeping any reserves at all.

[1]: https://fred.stlouisfed.org/series/IOER

[2]: https://fred.stlouisfed.org/series/FEDFUNDS

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