Entries by Tom 2

Why IOER Matters to You

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IOER, or “Interest On Excess Reserves,” refers to the interest the Fed and other central banks pay banks on their excess money (reserves) they keep in those central banks. So, if I’m a large bank, and I deposit more money than is required at any Fed bank, I get paid 25 basis points on that money. As of the latest Fed release, in October there was more than $2 trillion in “excess reserves” on the Fed’s balance sheet, earning 0.25% annual interest.

The Economy: A Look Back and What’s Ahead (11.25.13)

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Last week was highlighted by lots of “Fed-speak” and important economic data, and the net effect of both was to firmly solidify expectations for a Q1 ‘14 tapering of QE, and to incrementally increase the chances for a January taper (as opposed to March). Despite last week’s good data and “hawkish” Fed-speak, a December taper is still remote (and it’ll take a blowout jobs report next week to move those odds up significantly).