The Federal Reserve played down any disruption to its policy instruments caused by the so-called fall in excess reserves in the banking system last month, according to the minutes of Wednesday's September 25-26 meeting of the Federal Reserve.
Since the Fed began shrinking its balance sheet a year ago, it has cut its holdings of about $250 billion in bonds it bought to help the economy recover from recession. The bank reserve has fallen more than twice the size of the balance sheet shrinkage over the same period, prompting the Federal Reserve to gradually raise the main policy interest rate range, which is currently 2.00-2.25%.
The Fed's current excess reserve rate (IOER) is 2.2%.
The minutes of last month's excess reserves were sharp but short-lived, the minutes said. However, "the reduction in reserve requirements in the banking system does not appear to have any impact on the federal funds market," the Fed portfolio management company said at the September meeting.

<>The Fed downplayed the excess reserves of banks.

 

PREVIOUS:US Senate calls for Hyundai and KIA to attend hearings on engine fire        NEXT:Shanghai Composite Index rose more than 2% in early trading.