DEFINITION of 'Intermediate Targets'

Targets set by the Federal Reserve as part of its monetary policy goals. Intermediate targets can be any economic variable that is not directly controlled by the central bank. Although not directly controlled by the central bank, intermediate targets will often quickly adjust to policy changes and behave in a predictable manner relative to the Federal Reserve's economic goals. These targets pertain either to monetary growth or interest rates.

BREAKING DOWN 'Intermediate Targets'

Often, the Federal Reserve will adjust the Fed Funds Rate to achieve desired intermediate targets. Other indicators are also monitored, such as funds traded, debt and reserves. The Federal Reserve typically has three main tools for implementing its monetary policies: open market operations, discount window lending, and adjusting reserve requirements at depository institutions.

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  3. What do banks do to control the bank reserve?

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  4. Who determines the reserve ratio?

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  5. How does the Federal Reserve's set discount rate affect my personal finances?

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