The U.S. Federal Reserve’s benchmark rate for overnight loans between banks, the Fed funds effective rate , settled at 11 basis points on Tuesday, its highest level since Oct. 16, 2013.
The rate was up 1 basis point from 10 on Monday. On Friday it had settled at 9 basis points, which has been its average for the past year.
The increase comes as the Fed has been raising the rate it offers on the fixed-rate overnight reverse repurchase, or RRP, facility it has been testing for more than a year. This week it lifted the rate to 7 basis points from 3 basis points in the previous two weeks. Beginning Dec. 1, it will lift the RRP facility rate to 10 basis points.