In 2016, the Federal Reserve will have to pay at least $ 12.2 billion US and foreign banks in order to save money generated through their program of quantitative easing in the economy. If next year the Fed raises rates as expected, this amount could increase nearly doubled to $ 23.1 billion.
From 2008 to 2015, the Fed bought more than $ 4 trillion of bonds to stimulate economic growth. In order to limit the impact of the huge sums of money, which can cause price inflation, the Fed is paying above-market interest rate 0.50% to banks on reserve or electronic cash which are stored at the Fed. At present, banks hold $ 2.5 trillion in Fed and paid $ 34.5 million interest rate per day. The Fed announced its intention to raise rates in 2016 and analysts expect a rate hike in two or four times. Assuming that the Fed will raise rates four times - once for each of the meetings, which are accompanied by a press conference - to banks at the end of 2016 amount to $ 103.6 million. Per day.
Payments Fed to banks and funds in 2016
In addition to the payment of interest on savings, the Fed conducts daily auctions to run out of cash and maintain a minimum level of short-term interest rates. These reverse REPO operations generate revenues 0.25%, to an average of $ 154 billion a day due to the Fed's rate hike Dec. 16. Interest paid by the Fed to banks and funds that are involved in operations of $ 1.06 million a day. If the Fed raises rates as expected in 2016, the total payout will be $ 1.03 billion in 2016, in addition to the $ 23.1 billion paid as interest on reserves.