During the same period the Federal Open Market Committee held the RRP rate paid to domestic money-market funds at 0.05 percent.Д¬randall, a former Fed economist, said foreign central bank reserve managers are probably utilizing Fed RRPs as a liquidity cushion, because they are easier to liquidate than U.S. central bankвЂ™s latest quarterly financial statements. The New York Fed raised the rate it pays on overnight borrowings through RRPs with foreign central banks to 0.09 percent on average over the first nine months of 2015 from 0.03 percent during the same period of 2014, according to the U.S. 'The idea of the domestic RRP facility is to build more of a floor under market rates and this is an opportunity to extend that in a different direction,' said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. ItвЂ™s not impossible, but itвЂ™s certainly not inevitable.вЂќ вЂњAs to whether or not fed funds do ever come unhinged, thatвЂ™s hard to say. вЂњThere are lots of paths the money markets and the Fed together could go down, and there are enough where it would be very nice to have a spare reference rate on the shelf that this is a very worthwhile endeavor,вЂќ said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. central bankвЂ™s monetary policy target, but has lost its significance as a barometer of underlying economic activity since the 2008 financial crisis. The rate is intended to shore up the calculation that comprises the federal funds rate, a once-robust gauge of inter-bank borrowing costs that serves as the U.S. ThatвЂ™s one way to look at the new вЂњovernight bank funding rateвЂќ the New York Fed unveiled Wednesday. But itвЂ™s good to have a backup plan just in case that doesnвЂ™t work out. After eight years of unprecedented intervention in financial markets, the Federal Reserve has taken the first baby steps in a long-term mission to extract itself.

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