Federal Funds Rate

What Does Federal Funds Rate Mean?
The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight.

Investopedia explains Federal Funds Rate
This is what news reports are referring to when they talk about the Fed changing interest rates. In fact, the FOMC sets a target for this rate, but not the actual rate itself (because it is determined by the open market).

Related Terms

Ben Bernanke
Discount Rate
Discount Window
Fed Balance Sheet
Fed Model
Federal Reserve Bank
Federal Reserve Board - FRB
Federal Reserve Open Market Committee (FOMC)
Federal Reserve System
Prime Rate
Reserve Requirements
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Related Links

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