Term Fed Funds

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DEFINITION of 'Term Fed Funds'

Funds that banks borrow from the Federal Reserve for longer than a day, but generally less than 90 days. As a general rule, banks borrow term Fed funds when they need a temporary influx of cash, but still wish to benefit from a low interest rate.

INVESTOPEDIA EXPLAINS 'Term Fed Funds'

Because they are held for longer than the customary 24 hours, term Fed funds sometimes have higher interest rates than those held for shorter periods of time, though that rate is still much lower than an individual borrower could receive.

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    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  3. What are the differences between the Federal Funds Rate and LIBOR?

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  4. What is the correlation between inflation and interest rate risk?

    There is a positive correlation between inflation and interest rate risk. Inflation basically occurs when there is too much ... Read Full Answer >>
  5. Which nations' economies have reserve ratios?

    Most developed economies require a reserve ratio for their banks and other depository institutions, though there are some ... Read Full Answer >>
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