CME Group » Interest Rates » Interest Payment on Account Balance
Interest Payment on Account Balances and the Impact on Monetary Policy
By Pete Barker, and Daniel Grombacher - Mon Jul 25 20:25:00 CDT 2011 CT
Related Keywords: Interest Rates, Market Fundamentals

The Federal Reserve’s decision to pay interest on account balances held by depository institutions introduces an important new monetary policy tool – all the more important as the Fed plans to exit from the extraordinary lending and reserve supply policies that it implemented in response to the 2008 financial crisis. This makes an interesting development for financing and money market professionals who use 30-Day Fed Funds futures and options to manage short-term interest rate risk.


 
 
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