Balance sheet normalisation has put upward pressure on borrowing costs – Kansas Fed


Borrowing costs may move higher relative to the interest rate paid on excess reserves (IOER), even if reserves balances remain plentiful, a senior economist from the Federal Reserve Bank of Kansas says in a new paper.

Since the 2008 financial crisis, the Fed has controlled borrowing costs by changing the IOER. In recent times borrowing costs, given by the effective federal funds rate, have gradually moved higher relative to the IOER, and the spread between the two is now zero. In the paper

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: