Fed researchers propose another policy tool

New York

THE Federal Reserve Bank of New York's research chief detailed the case for an additional policy tool to raise interest rates that would reduce dealings with the shadow-banking system when the time comes to do so.

The tool, called a segregated balance account, could be used to supplement the US central bank's other mechanisms for raising rates, according to a paper released on Friday and co-written by New York Fed director of research James McAndrews.