Fed Seen Paying Banks $77 Billion on Reserves: Chart of the Day

The Federal Reserve could pay more than $77 billion a year in interest on the excess cash reserves it holds for commercial banks if rates follow the highest path forecast by Fed policy makers.

The CHART OF THE DAY shows the Fed’s annual interest costs by the end of 2015 could range from $4.3 billion to $77.7 billion, depending on interest rates and assuming excess reserves remain at current levels, according to Bloomberg calculations based on Fed data. The central bank already has paid more than $13 billion since 2008 when Congress authorized interest on reserve balances as part of financial-rescue legislation.