| For immediate release |
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The Federal Reserve Board on Wednesday announced modifications to the method for calculating the private sector adjustment factor (PSAF).
The PSAF imputes the costs that would have been incurred and profits that would have been earned if the Reserve Banks' priced services were provided by a private firm. The revised method will be used to determine the 2002 PSAF and fees for Federal Reserve priced services. The Monetary Control Act of 1980 requires that fees for Federal Reserve priced services be set at a rate to recover all direct and indirect costs of providing the services and imputed costs, such as financing costs, return on equity (profit), taxes, and certain other expenses. The method for calculating the PSAF is reviewed by the Board periodically. The Board requested public comment on the changes in December 2000. The changes approved by the Board modify the current method for imputing debt and equity, enhance the method for determining the target rate of return on equity, and refine the basis for selecting the priced-services peer group. The Board's notice is attached. |