June 22, 2018 / 7:52 PM / a year ago

U.S. Fed may adjust tool on bank reserves again - TD

NEW YORK, June 22 (Reuters) - The U.S. Federal Reserve may consider tweaking again a tool to control the level of excess bank reserves if a key overnight borrowing cost rises further from current levels, TD Securities strategists said on Friday.

The federal funds rate, or what banks charge each other to borrow excess bank reserves, has risen in the past couple of days, likely due to reduced excess reserves in the U.S. banking system, they said.

The fed funds rate was 1.92 percent on Thursday, only 3 basis points below the interest rate that the U.S. central bank pays on excess reserves. (Reporting by Richard Leong Editing by Chizu Nomiyama)

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