since banks can always deposit cash into their reserve account account at the FED and earn the IORB rate they have little incentive to lend at rates below IORB

effectively, this sets the floor (lower bound of the corridor) for interest rates for banks

Illya Gerasymchuk 2025-07-31 10:09

Interest on Reserve Balances (IORB) is the rate FED pays banks on their excess reserves

commercial banks have reserve accounts at the FED. regulations define the minimum amounts - any excess earns the IORB interest rate set by the FED