Definition
The interest on reserve balances rate is the rate paid on reserves held by banks.
Why It Matters
It influences banks’ incentives to lend or hold reserves.
Example
Raising the rate to reduce lending.
Malone Global University
Malone Global University
Economics Glossary – Malone Global University
The interest on reserve balances rate is the rate paid on reserves held by banks.
It influences banks’ incentives to lend or hold reserves.
Raising the rate to reduce lending.