MNI BRIEF: Fed Raises IORB, ONRRP Rates, Keeps 10bp Spread

The Federal Reserve raised the interest on reserve balances rate to 0.4% and the overnight reverse repo rate to 0.3%, the U.S. central bank said Wednesday, keeping the administered rates at the same 10bp spread.

The Fed raised the administered rates as it lifted its benchmark fed funds rate by 25bps. The Fed’s reverse repo facility (ON RRP) was previously set at 5 bps and the rate paid on reserves (IORB) was set at 15 bps. The Fed's discount window, which has seen an uptick in usage in recent weeks, was kept at the top of the fed funds range, now at 0.5%.

With the move today, some analysts predict the fed funds rate is likely to settle at around 33 bps. The FOMC's January meeting minutes hinted at keeping the same spread between the rates during liftoff, while New York Fed markets chief Lorie Logan has said "adjustments could be warranted over time."