Powell Seeks to Assert Control Over Fed Funds With IOER Tweak
- IOER lowered to 2.35%; target range for fed funds unchanged
- Adjustment to rate will go into effect on Thursday, May 2
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The Federal Reserve on Wednesday lowered the rate on one of the tools it uses to help control its benchmark even as it left unchanged the overall target range for the fed funds rate.
Fed officials decided to lower the interest paid on excess reserves by 5 basis points to 2.35 percent, effective May 2, although policy makers kept the overall target range for the fed funds rate unchanged at 2.25 percent to 2.50 percent. Fed Chairman Jerome Powell described it as a “small technical adjustment” that doesn’t reflect any shift in stance of monetary policy.