83 FR 13104 - Regulation D: Reserve Requirements of Depository Institutions

FEDERAL RESERVE SYSTEM

Federal Register Volume 83, Issue 59 (March 27, 2018)

Page Range		13104-13105
FR Document		2018-06124

The Board of Governors of the Federal Reserve System (``Board'') is amending Regulation D (Reserve Requirements of Depository Institutions) to revise the rate of interest paid on balances maintained to satisfy reserve balance requirements (``IORR'') and the rate of interest paid on excess balances (``IOER'') maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORR is 1.75 percent and IOER is 1.75 percent, a 0.25 percentage point increase from their prior levels. The amendments are intended to enhance the role of such rates of interest in moving the Federal funds rate into the target range established by the Federal Open Market Committee (``FOMC'' or ``Committee'').

Federal Register, Volume 83 Issue 59 (Tuesday, March 27, 2018)

[Federal Register Volume 83, Number 59 (Tuesday, March 27, 2018)]
[Rules and Regulations]
[Pages 13104-13105]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-06124]


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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1602]
RIN 7100 AF 01


Regulation D: Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') is amending Regulation D (Reserve Requirements of 
Depository Institutions) to revise the rate of interest paid on 
balances maintained to satisfy reserve balance requirements (``IORR'') 
and the rate of interest paid on excess balances (``IOER'') maintained 
at Federal Reserve Banks by or on behalf of eligible institutions. The 
final amendments specify that IORR is 1.75 percent and IOER is 1.75 
percent, a 0.25 percentage point increase from their prior levels. The 
amendments are intended to enhance the role of such rates of interest 
in moving the Federal funds rate into the target range established by 
the Federal Open Market Committee (``FOMC'' or ``Committee'').

DATES: The amendments to part 204 (Regulation D) are effective March 
27, 2018. The IORR and IOER rate changes are applicable on March 22, 
2018.

FOR FURTHER INFORMATION CONTACT: Sophia Allison, Special Counsel (202-
452-3565), or Clinton Chen, Senior Attorney (202-452-3952), Legal 
Division, or Kristen Payne, Financial Analyst (202-452-2872), or 
Heather Wiggins, Section Chief (202-452-3674), Division of Monetary 
Affairs; for users of Telecommunications Device for the Deaf (TDD) 
only, contact 202-263-4869; Board of Governors of the Federal Reserve 
System, 20th and C Streets NW, Washington, DC 20551.

SUPPLEMENTARY INFORMATION: 

I. Statutory and Regulatory Background

    For monetary policy purposes, section 19 of the Federal Reserve Act 
(``the Act'') imposes reserve requirements on certain types of deposits 
and other liabilities of depository institutions.\1\ Regulation D, 
which implements section 19 of the Act, requires that a depository 
institution meet reserve requirements by holding cash in its vault, or 
if vault cash is insufficient, by maintaining a balance in an account 
at a Federal Reserve Bank (``Reserve Bank'').\2\ Section 19 also 
provides that balances maintained by or on behalf of certain 
institutions in an account at a Reserve Bank may receive earnings to be 
paid by the Reserve Bank at least once each quarter, at a rate or rates 
not to exceed the general level of short-term interest rates.\3\ 
Institutions that are eligible to receive earnings on their balances 
held at Reserve Banks (``eligible institutions'') include depository 
institutions and certain other institutions.\4\ Section 19 also 
provides that the Board may prescribe regulations concerning the 
payment of earnings on balances at a Reserve Bank.\5\ Prior to these 
amendments, Regulation D specified a rate of 1.50 percent for both IORR 
and IOER.\6\
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    \1\ 12 U.S.C. 461(b).
    \2\ 12 CFR 204.5(a)(1).
    \3\ 12 U.S.C. 461(b)(1)(A) and (b)(12)(A).
    \4\ See 12 U.S.C. 461(b)(1)(A) and (b)(12)(C); see also 12 CFR 
204.2(y).
    \5\ See 12 U.S.C. 461(b)(12)(B).
    \6\ See 12 CFR 204.10(b)(5).
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II. Amendments to IORR and IOER

    The Board is amending Sec.  204.10(b)(5) of Regulation D to specify 
that IORR is 1.75 percent and IOER is 1.75 percent. This 0.25 
percentage point increase in the IORR and IOER was associated with an 
increase in the target range for the federal funds rate, from a target 
range of 1\1/4\ to 1\1/2\ percent to a target range of 1\1/2\ to 1\3/4\ 
percent, announced by the FOMC on March 21, 2018, with an effective 
date of March 22, 2018. The FOMC's press release on the same day as the 
announcement noted that:
    Information received since the Federal Open Market Committee met in 
January indicates that the labor market has continued to strengthen and 
that economic activity has been rising at a moderate rate. Job gains 
have been strong in recent months, and the unemployment rate has stayed 
low. Recent data suggest that growth rates of household spending and 
business fixed investment have moderated from their strong fourth-
quarter readings. On a 12-month basis, both overall inflation and 
inflation for items other than food and energy have continued to run 
below 2 percent. Market-based measures of inflation compensation have 
increased in recent months but remain low; survey-based measures of 
longer-term inflation expectations are little changed, on balance.
    Consistent with its statutory mandate, the Committee seeks to 
foster maximum employment and price stability. The economic outlook has 
strengthened in recent months. The Committee expects that, with further 
gradual adjustments in the stance of monetary policy, economic activity 
will expand at a moderate pace in the medium term and labor market

[[Page 13105]]

conditions will remain strong. Inflation on a 12-month basis is 
expected to move up in coming months and to stabilize around the 
Committee's 2 percent objective over the medium term. Near-term risks 
to the economic outlook appear roughly balanced, but the Committee is 
monitoring inflation developments closely.
    In view of realized and expected labor market conditions and 
inflation, the Committee decided to raise the target range for the 
federal funds rate to 1\1/2\ to 1\3/4\ percent. The stance of monetary 
policy remains accommodative, thereby supporting strong labor market 
conditions and a sustained return to 2 percent inflation. A Federal 
Reserve Implementation note released simultaneously with the 
announcement stated that:

    The Board of Governors of the Federal Reserve System voted 
unanimously to raise the interest rate paid on required and excess 
reserve balances to 1.75 percent, effective March 22, 2018.

    As a result, the Board is amending Sec.  204.10(b)(5) of Regulation 
D to change IORR to 1.75 percent and IOER to 1.75 percent.

III. Administrative Procedure Act

    In general, the Administrative Procedure Act (``APA'') \7\ imposes 
three principal requirements when an agency promulgates legislative 
rules (rules made pursuant to congressionally delegated authority): (1) 
Publication with adequate notice of a proposed rule; (2) followed by a 
meaningful opportunity for the public to comment on the rule's content; 
and (3) publication of the final rule not less than 30 days before its 
effective date. The APA provides that notice and comment procedures do 
not apply if the agency for good cause finds them to be ``unnecessary, 
impracticable, or contrary to the public interest.'' \8\ Section 553(d) 
of the APA also provides that publication at least 30 days prior to a 
rule's effective date is not required for (1) a substantive rule which 
grants or recognizes an exemption or relieves a restriction; (2) 
interpretive rules and statements of policy; or (3) a rule for which 
the agency finds of good cause for shortened notice and publishes its 
reasoning with the rule.\9\
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    \7\ 5 U.S.C. 551 et seq.
    \8\ 5 U.S.C. 553(b)(3)(A).
    \9\ 5 U.S.C. 553(d).
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    The Board has determined that good cause exists for finding that 
the notice, public comment, and delayed effective date provisions of 
the APA are unnecessary, impracticable, or contrary to the public 
interest with respect to these final amendments to Regulation D. The 
rate increases for IORR and IOER that are reflected in the final 
amendments to Regulation D were made with a view towards accommodating 
commerce and business and with regard to their bearing upon the general 
credit situation of the country. Notice and public comment would 
prevent the Board's action from being effective as promptly as 
necessary in the public interest, and would not otherwise serve any 
useful purpose. Notice, public comment, and a delayed effective date 
would create uncertainty about the finality and effectiveness of the 
Board's action and undermine the effectiveness of that action. 
Accordingly, the Board has determined that good cause exists to 
dispense with the notice, public comment, and delayed effective date 
procedures of the APA with respect to these final amendments to 
Regulation D.

IV. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (``RFA'') does not apply to a 
rulemaking where a general notice of proposed rulemaking is not 
required.\10\ As noted previously, the Board has determined that it is 
unnecessary and contrary to the public interest to publish a general 
notice of proposed rulemaking for this final rule. Accordingly, the 
RFA's requirements relating to an initial and final regulatory 
flexibility analysis do not apply.
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    \10\ 5 U.S.C. 603 and 604.
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V. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (``PRA'') of 
1995,\11\ the Board reviewed the final rule under the authority 
delegated to the Board by the Office of Management and Budget. The 
final rule contains no requirements subject to the PRA.
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    \11\ 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1.
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List of Subjects in 12 CFR Part 204

    Banks, Banking, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Board amends 12 CFR 
part 204 as follows:

PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 
(REGULATION D)

0
1. The authority citation for part 204 continues to read as follows:

    Authority:  12 U.S.C. 248(a), 248(c), 461, 601, 611, and 3105.

0
2. Section 204.10 is amended by revising paragraph (b)(5) to read as 
follows:


Sec.  204.10   Payment of interest on balances.

* * * * *
    (b) * * *
    (5) The rates for IORR and IOER are:

------------------------------------------------------------------------
                                                             Rate (%)
------------------------------------------------------------------------
IORR....................................................            1.75
IOER....................................................            1.75
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* * * * *


    By order of the Board of Governors of the Federal Reserve 
System, March 22, 2018.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2018-06124 Filed 3-26-18; 8:45 am]
 BILLING CODE 6210-01-P

Federal Register / Vol. 83, No. 59 / Tuesday, March 27, 2018 / Rules and Regulations 13105

conditions will remain strong. Inflation these final amendments to Regulation D. § 204.10 Payment of interest on balances.
on a 12-month basis is expected to move The rate increases for IORR and IOER * * * * *
up in coming months and to stabilize that are reflected in the final (b) * * *
around the Committee’s 2 percent amendments to Regulation D were made (5) The rates for IORR and IOER are:
objective over the medium term. Near- with a view towards accommodating
term risks to the economic outlook commerce and business and with regard Rate
appear roughly balanced, but the to their bearing upon the general credit (%)
Committee is monitoring inflation situation of the country. Notice and
IORR ..................................... 1.75
developments closely. public comment would prevent the IOER ..................................... 1.75
In view of realized and expected labor Board’s action from being effective as
market conditions and inflation, the promptly as necessary in the public
Committee decided to raise the target * * * * *
interest, and would not otherwise serve
range for the federal funds rate to 11⁄2 to any useful purpose. Notice, public
13⁄4 percent. The stance of monetary By order of the Board of Governors of the
comment, and a delayed effective date
policy remains accommodative, thereby Federal Reserve System, March 22, 2018.
would create uncertainty about the
supporting strong labor market Ann E. Misback,
finality and effectiveness of the Board’s
conditions and a sustained return to 2 action and undermine the effectiveness Secretary of the Board.
percent inflation. A Federal Reserve of that action. Accordingly, the Board [FR Doc. 2018–06124 Filed 3–26–18; 8:45 am]
Implementation note released has determined that good cause exists to BILLING CODE 6210–01–P
simultaneously with the announcement dispense with the notice, public
stated that: comment, and delayed effective date
The Board of Governors of the Federal procedures of the APA with respect to DEPARTMENT OF HEALTH AND
Reserve System voted unanimously to raise these final amendments to Regulation D. HUMAN SERVICES
the interest rate paid on required and excess
reserve balances to 1.75 percent, effective IV. Regulatory Flexibility Analysis Food and Drug Administration
March 22, 2018. The Regulatory Flexibility Act
As a result, the Board is amending (‘‘RFA’’) does not apply to a rulemaking 21 CFR Part 5
§ 204.10(b)(5) of Regulation D to change where a general notice of proposed [Docket No. FDA–2018–N–0011]
IORR to 1.75 percent and IOER to 1.75 rulemaking is not required.10 As noted
percent. previously, the Board has determined Revision of Organization; Technical
that it is unnecessary and contrary to Amendment
III. Administrative Procedure Act
the public interest to publish a general
In general, the Administrative notice of proposed rulemaking for this AGENCY: Food and Drug Administration,
Procedure Act (‘‘APA’’) 7 imposes three final rule. Accordingly, the RFA’s HHS.
principal requirements when an agency requirements relating to an initial and Final rule; technical
ACTION:
promulgates legislative rules (rules final regulatory flexibility analysis do amendment.
made pursuant to congressionally not apply.
delegated authority): (1) Publication SUMMARY: The Food and Drug
with adequate notice of a proposed rule; V. Paperwork Reduction Act Administration (FDA or Agency) is
(2) followed by a meaningful In accordance with the Paperwork amending its regulations to reflect
opportunity for the public to comment Reduction Act (‘‘PRA’’) of 1995,11 the organizational change for the Office of
on the rule’s content; and (3) Board reviewed the final rule under the Regulatory Policy, Center for Drug
publication of the final rule not less authority delegated to the Board by the Evaluation and Research (CDER), Office
than 30 days before its effective date. Office of Management and Budget. The of Medical Products and Tobacco. FDA
The APA provides that notice and final rule contains no requirements is taking this action to ensure accuracy
comment procedures do not apply if the subject to the PRA. and clarity in the Agency’s regulations.
agency for good cause finds them to be DATES: This rule is effective March 27,
‘‘unnecessary, impracticable, or contrary List of Subjects in 12 CFR Part 204
2018.
to the public interest.’’ 8 Section 553(d) Banks, Banking, Reporting and FOR FURTHER INFORMATION CONTACT:
of the APA also provides that recordkeeping requirements. Florine Purdie, Center for Drug
publication at least 30 days prior to a For the reasons set forth in the Evaluation and Research, Food and
rule’s effective date is not required for preamble, the Board amends 12 CFR Drug Administration, 10903 New
(1) a substantive rule which grants or part 204 as follows: Hampshire Ave. Bldg. 51, Rm. 6248,
recognizes an exemption or relieves a Silver Spring, MD 20993–0002, 301–
restriction; (2) interpretive rules and PART 204—RESERVE
796–3601.
statements of policy; or (3) a rule for REQUIREMENTS OF DEPOSITORY
which the agency finds of good cause INSTITUTIONS (REGULATION D) SUPPLEMENTARY INFORMATION: FDA is
for shortened notice and publishes its amending 21 CFR 5.1100 to update the
reasoning with the rule.9 ■ 1. The authority citation for part 204 organizational information for the Office
The Board has determined that good continues to read as follows: of Regulatory Policy, CDER, Office of
cause exists for finding that the notice, Authority: 12 U.S.C. 248(a), 248(c), 461, Medical Products and Tobacco.
public comment, and delayed effective 601, 611, and 3105. Publication of this document
date provisions of the APA are constitutes final action on this change
amozie on DSK30RV082PROD with RULES

■ 2. Section 204.10 is amended by
unnecessary, impracticable, or contrary revising paragraph (b)(5) to read as under the Administrative Procedure Act
to the public interest with respect to follows: (5 U.S.C. 553). FDA has determined that
notice and public comment are
75 U.S.C. 551 et seq. 10 5 U.S.C. 603 and 604. unnecessary because this amendment to
85 U.S.C. 553(b)(3)(A). 11 44 U.S.C. 3506; see 5 CFR part 1320, appendix the regulations provides only a
9 5 U.S.C. 553(d). A.1. technical change to update the

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Document Created: 2018-03-27 01:26:33
Document Modified: 2018-03-27 01:26:33

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule.
Dates		The amendments to part 204 (Regulation D) are effective March 27, 2018. The IORR and IOER rate changes are applicable on March 22, 2018.
Contact		Sophia Allison, Special Counsel (202- 452-3565), or Clinton Chen, Senior Attorney (202-452-3952), Legal Division, or Kristen Payne, Financial Analyst (202-452-2872), or Heather Wiggins, Section Chief (202-452-3674), Division of Monetary Affairs; for users of Telecommunications Device for the Deaf (TDD) only, contact 202-263-4869; Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551.
FR Citation		83 FR 13104
CFR Associated		Banks; Banking and Reporting and Recordkeeping Requirements