Effective Fed funds rate (EFFR) held at 2.20% Wednesday
Effective Fed funds rate (EFFR) held at 2.20% Wednesday, after rising to that level from Monday's 2.19% (and from the 2.18% level printed from September 27 following the FOMC's rate hike to October 16). This 2.20% level is just off the top of the FOMC's 2.0% to 2.25% policy band. And it leaves the EFFR-IOER spread flat. Remember the Fed made a technical adjustment to IOER back with the June 13 tightening, raising it only 20 bps versus the 25 bp funds rate tightening in order to maintain a spread. While there is risk the FOMC will trim IOER 5 bps at the November 7, 8 policy meeting a put a spread back into the pair, analysts suspect the FOMC will wait for the December 18, 19 meeting to act (boost IOER 20 bps alongside a 25 bp rate hike) amid some concern of confusing the markets, especially as policy uncertainties are growing.