MNI BRIEF: Fed to Rely On IOER, ONRRP to Control Rates-Minutes

A senior Federal Reserve official in January said the central bank will rely on the IOER and ON RRP rates as market pricing suggests the fed funds rate could decline "modestly" through the second quarter, according to the meeting minutes released Wednesday.

The New York Fed's markets group head, Lorie Logan, "anticipated that the Federal Reserve's tools, including the IOER rate and overnight reverse repurchase agreement facility, would continue to provide effective control over the federal funds rate and other overnight money market rates," the minutes said. "Going forward, reserves were projected to rise rapidly through the summer, reflecting ongoing Federal Reserve asset purchases as well as expected declines in balances held in the Treasury General Account."

MNI reported earlier this week the Fed is likely to adjust its IOER and ON RRP rates upward at some point in the coming months to counter the downward trend of money market rates.