According to the WSJ’s Hilsenrath, there is little appetite for cutting the Interest on Excess Reserves Rate.
There’s no groundswell at the Fed to follow suit, however. This became apparent when Fed Chairman Ben Bernanke did not even mention it as an option in his lengthy discussion Friday of steps the Fed can take to stimulate the weak economy.
Given this cool reception, officials seem unlikely to move aggressively down this path, if at all. If there is a middle ground for the Fed chairman, it might be a very small cut in this interest rate to some level still above zero, packaged together with other measures to boost growth.
Further down the article, Jon says that QE3 is currently being discussed:
There is another roadblock at the Fed to advancing this idea. Officials are in the midst of intense discussions about other policy changes, including launching a new bond-buying program, and they are deeply divisive. A debate over the interest paid on reserves might be a distraction, and a source of unneeded disagreement, as they try to reach agreement on what many see as bigger issues.