August 22, 2018 / 2:56 PM / 3 months ago

U.S. fed funds rate rise seen pressuring Fed for more guidance - BAML

NEW YORK, Aug 22 (Reuters) - The latest increase in the federal funds rate will likely pressure the Federal Reserve to offer more guidance about the reduction of its balance sheet and whether it would consider shifting its policy target to a new rate benchmark, according to a Bank of America Merrill Lynch analyst.

The effective, or average, interest rate on the fed funds was 1.92 percent for a fourth straight day on Tuesday. Its spread against the interest the U.S. central bank pays on excess reserves stands at 3 basis points, compared with 4 basis points a week ago. (Reporting by Richard Leong)

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