Description
The U.S. Federal Funds Rate can be divided into an upper limit and a lower limit. The rate representing the upper bound is typically the Interest Rate on Reserve Balances (IORB), while the rate representing the lower bound is the Overnight Reverse Repurchase Agreement Rate (ON RRP).
Interest Rate on Reserve Balances (IORB): This is the rate paid by the Federal Reserve to commercial banks for reserves held at the Federal Reserve.
Overnight Reverse Repurchase Agreement Rate (ON RRP): This is the rate paid by the Federal Reserve to smaller financial institutions through overnight reverse repurchase operations.