WASHINGTON — House Republicans are ramping up their criticism of the Federal Reserve for making interest payments to member banks on excess reserves, and may have identified a way to counter the central bank’s longstanding claim that the payments are critical to executing monetary policy.

The issue is to be debated Thursday at a Financial Services Committee hearing. Last week, Chairman Jeb Hensarling told Fed Chair Janet Yellen that interest on excess reserves, or IOER, should "not become a permanent tool of monetary policy."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.