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WASHINGTON (MNI) - The following is an excerpt from the Federal Open
Market Committee minutes of the April 30 - May 1 meeting, published
The deputy manager also discussed a staff proposal in which the
Board would implement a 5 basis point technical adjustment to the
Interest on Required Reserves (IORR) and IOER rates. The proposed action
would bring these rates to 15 basis points below the top of the target
range for the federal funds rate and 10 basis points above the bottom of
the range and the overnight reverse repurchase agreement (ON RRP) offer
rate. As with the previous technical adjustments in June and December
2018, the proposed adjustment was intended to foster trading in the
federal funds market well within the target range established by the
A technical adjustment would reduce the spread between the IOER
rate and the ON RRP offering rate to 10 basis points, the smallest since
the introduction of the ON RRP facility. The staff judged that the
narrower spread did not pose a significant risk of increased take-up at
the ON RRP facility because repo rates had been trading well above the
ON RRP offer rate for some time. However, if it became appropriate in
the future to further lower the IOER rate, the staff noted that the
Committee might wish to first consider where to set the ON RRP offer
rate relative to the target range for the federal funds rate to mitigate
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