Fed raises interest on reserve balances to 3.90%

The Board of Governors of the Federal Reserve System issued a final rule amending Regulation D to set the interest on reserve balances (IORB) at 3.90 percent. The amendment, docket R-1902 and RIN 7100-AH32, is effective September 30, 2026, with the rate applicable as of September 17, 2026. The change raises the IORB rate by 0.25 percentage point from the prior 3.65 percent.

The Board states the increase is intended to enhance the role of IORB in maintaining the federal funds rate within the target range the Federal Open Market Committee announced on September 16, 2026 - 3¾ percent to 4 percent. By aligning the IORB rate with the Committee's target, the Board aims to support monetary-policy objectives.

The rule was adopted without prior notice or public comment. Citing good cause, the Board determined that the APA's notice-and-comment requirements would be unnecessary, impracticable, or contrary to the public interest for this amendment. Accordingly, the Board waived the standard 30-day pre-effective-date publication and the related procedural steps. The Regulatory Flexibility Act does not apply because a general notice of proposed rulemaking was not required, and the Paperwork Reduction Act analysis found no new reporting requirements.

The regulatory text amendment revises Sec. 204.10(b)(1) of 12 CFR part 204 to read: "The IORB rate is 3.90 percent." The final rule was signed by Michele Taylor Fennell, Associate Secretary of the Board, and filed as FR Doc 2026-20037 on September 29, 2026.

For further information, contact M. Benjamin Snodgrass, Special Counsel, or Nicole Trachman, Senior Financial Institution & Policy Analyst, both in the Board's Division of Monetary Affairs.