If the central bank does not pay interest to the bank's on overnight reserves, then deficit spending by the treasury

will put too much money in the system which ultimately is inflationary if the spending gap closes.
will reduce short-term interest rates unless the central bank offers an interest-bearing government bond to the banks.
will push up short-term interest rates if investors sense that inflation will be higher.

Answer: will reduce short-term interest rates unless the central bank offers an interest-bearing government bond to the banks.

Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.