In post-repo squeeze twist, Fed may nudge up interest paid to banks

One potential side effect of the U.S. Federal Reserve's efforts to pump liq...

- One potential side effect of the U.S. Federal Reserve’s efforts to pump liquidity into the banking system and avoid further unwanted surges in short-term borrowing rates: The central bank may soon have to take measures to keep interest rates from getting too low.

Raising the IOER could bring the effective funds rate closer to the middle of the Fed’s target range of 1.5% to 1.75%, said Zachary Griffiths, a rate strategist for Wells Fargo Securities. “Should conditions warrant this adjustment, the IOER rate could move closer to the middle of the target range for the federal funds rate,” the Fed said in the minutes.

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