February 21, 2013 / 6:36 PM / 5 years ago

Tell Fed if you don't want it to pay banks higher IOER -Bullard

NEW YORK, Feb 21 (Reuters) - Americans should tell their central bank if they are uncomfortable with the notion of paying banks higher interest rates on excess reserves, because that is what the Federal Reserve is planning when it needs to reverse its easy policies, a top Fed official said on Thursday.

The Fed’s policy exit strategy is “intimately tied” to paying banks a higher rate of interest on excess reserves (IOER), St. Louis Fed President James Bullard told students and professors at New York University. The Fed believes that raising the IOER rate should dissuade banks from lending, helping to curb inflation if needed.

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