The rates paid on Regulation D reserves and charged for Reserve Bank credit (and reflected in Regulation A) were all cut a quarter-point in keeping with a similar reduction taken last month in the federal funds rate, the central bank announced in Federal Register notices.
These actions reduced the rate paid on Reg D reserves – both required reserves and excess reserves – from 1.8% to 1.55%, according to the notices set to publish in the Register Thursday. The Fed also reduced the primary credit rate charged by each Reserve Bank from 2.5% to 2.25%. The secondary credit rate automatically decreased by formula, from 3% to 2.75%, as a result of the primary credit action.
The above rate cuts, applicable Oct. 31, were approved by the Federal Reserve Board Oct. 30, when the Federal Open Market Committee (FOMC) voted to reduce the fed funds rate a quarter-point to a target range of 1-1/2% to 1-3/4%.