Inflation is caused when there is more demand than supply for products and services at the current price level. When there are excess bank reserves, the Natural Equilibrium of Interest Rates (NEIR) points out the cost of capital is an integral part of inflation because fed funds are naturally near 0%, so when the Federal Reserve Bank increases the cost of capital by paying Interest On Excess Reserves (IOER), this policy is in fact inflationary and risks stagflation. When there are excess bank reserves, restricting leverage rather than paying IOER to keep sections of the economy from overheating is an alternative tool for tightening money supply. In short, the near unlimited supply of workers and products due to globalization and technology keeps inflation low and if the Fed were not to pay IOER, fed funds and inflation would be near 0% as was the case in 2015.