Glossary · Macro · Monetary policy

Interest on reserves (IOR)

Interest the central bank pays banks on the reserves they keep with it. Raising it makes parking money at the central bank more attractive than lending it out, so it tightens credit without selling a single bond. It has become a main tool since 2008.

Also called: IOR, interest on excess reserves

Draw it yourself Taught in: Central Bank Tools

Related terms

Central bank tools Reserve requirement

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