Fed Reserve Rate vs. Your Bank Deposit Rate
Summary
Hollow Point Trading shares an explainer on why the Federal Reserve’s interest rate on reserve balances is not the rate paid on household savings accounts. It clarifies that eligible institutions hold reserve balances at Federal Reserve Banks, while customer deposits are liabilities of commercial banks, highlighting how the Fed uses IORB as a monetary policy tool.
https://youtu.be/--a1b7jSrK0
The Fed reserve rate is not your bank deposit rate #IORB #FederalRe...
The interest rate on reserve balances is not the rate promised on your savings account. Eligible institutions hold balances at Federal Reserve Banks. The Federal Reserve sets the interest rate paid on those balances as a monetary policy tool. Your household deposit is instead a liability of your commercial bank. Imagine an eligible bank comparin...
