5  -5Implementation Tool 2: Interest on Reserve Balances Close to the bottom of the demand curve is the interest on reserve balances rate denoted by IORB rate in figure 2.
This is the interest rate the Fed pays on reserves eligible institutions keep at Federal Reserve Banks.8 This interest rate is the primary tool the Fed uses currently to implement monetary policy.9 In the graph, observe that the federal funds rate is close to this rate.