Fed Interest Payments Are Likely Here to Stay, JPMorgan Says

A proposal to eliminate the interest paid to banks that deposit cash at the Federal Reserve risks unleashing tremors across the industry, funding markets and US monetary policy, according to JPMorgan Chase & Co. strategists.

Senator Ted Cruz suggested in an interview last week on CNBC that Congress could abolish paying interest on reserve balances to reduce government spending. Cruz said there had been “a robust discussion” in the Senate about this possibility, but also added that he was uncertain of the actual likelihood of the change.