Pending Establishment of an Interest Rate Corridor Framework | M-005

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Establishment of an Interest Rate Corridor Framework​

Motion No.: M-005-MAR-2026
Category: Banking Reserves
Legal Basis: Federal Reserve Act (FRA) §§ 4, 5, 6, 8, 9 & 11

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WHEREAS​

The Federal Reserve Bank of Redmont is mandated under the Federal Reserve Act to conduct monetary policy in a manner that promotes financial stability, orderly financial markets, and sustainable economic activity; and

WHEREAS​

Modern monetary policy frameworks commonly utilize interest rate corridors to guide short-term market interest rates and to provide clear operational boundaries for central bank liquidity facilities; and

WHEREAS​

The Federal Reserve Board has determined that the establishment of a standing interest rate corridor framework will provide a transparent and predictable structure for the implementation of monetary policy through the use of central bank deposit and lending facilities;

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NOW, THEREFORE, BE IT RESOLVED THAT​

1. The Policy Rate shall serve as the central operating rate for the conduct of monetary policy.
2. The Deposit Rate shall mean the maximum interest rate that the Federal Reserve Bank of Redmont may pay on any credit instruments, deposits, or other interest-bearing liabilities of the Federal Reserve Bank, and shall be set at twenty-five (25) basis points (or 0.25%) below the Policy Rate.
3. The Bank Rate shall mean the minimum interest rate that the Federal Reserve Bank may charge on standing lending facilities, or other credit facilities to eligible financial institutions, and shall be set at twenty-five (25) basis points (0.25%) above the Policy Rate.
4. The Deposit Rate and the Bank Rate shall automatically adjust in accordance with any change to the Policy Rate, so as to maintain a symmetric corridor of ±25 basis points around the Policy Rate, unless otherwise determined by the Board.

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VOTING​

This motion shall be adopted upon approval by a simple majority of the sitting members of the Federal Reserve Board.
In the event of a tie, the Secretary of the Department of Commerce shall cast the deciding vote, pursuant to the Federal Reserve Act.

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EFFECTIVE DATE​

This motion shall take effect immediately upon passage and shall apply to all Reserve & Deposit Returns due beginning with the first filing period following its adoption.