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Fed's Powell cautions against ending Fed power to pay interest on reserves
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Fed's Powell cautions against ending Fed power to pay interest on reserves
Jun 25, 2025 8:07 AM

NEW YORK (Reuters) -Federal Reserve Chairman Jerome Powell said Wednesday that the central bank's power to pay interest on cash that banks park at the central bank is a key part of the Fed's interest rate control toolkit and would be difficult to unwind. 

"If you were to want to go back to a scarce reserves, it would be a long and bumpy and volatile road," Powell told a Senate committee during testimony. "I wouldn't recommend that we undertake that road" and if it were done it "would not save any money." 

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