The IOER Rate: What Banks Need To Know About The Future of Fed Funds

The Return of the Fed Funds Market

The future holds various material changes that will impact how banks currently manage liquidity. We have not had an active Fed Funds market since 2008 but we believe it may be about to start up. As rates continue to rise, it might be time to reverse a portion of the Fed’s $2T of liquidity that currently resides on their balance sheet and return another monetary policy lever back to normal.

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