Term Federal Funds

DEFINITION of 'Term Federal Funds'

Balances purchased in Federal Reserve accounts for more than a single day. Term federal funds usually have a maximum term of 90 days. Banks purchase these funds when their borrowing needs will last for several days.

BREAKING DOWN 'Term Federal Funds'

Banks also purchase term federal funds in order to lock in the current short-term interest rate in a rising rate environment. They resemble overnight federal funds in that they are not subject to reserve requirements. For this reason, they are often purchased in lieu of other comparable instruments with similar maturities.

RELATED TERMS
  1. Federal Funds

    Excess reserves that commercial banks deposit at regional Federal ...
  2. Federal Reserve Credit

    Refers to the process of the Federal Reserve lending funds on ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds ...
  4. Term Fed Funds

    Funds that banks borrow from the Federal Reserve for longer than ...
  5. Adjustment Credit

    A short-term loan made by a Federal Reserve Bank to a smaller ...
  6. Target Rate

    The interest rate charged by one depository institution on an ...
Related Articles
  1. Economics

    What's the Federal Funds Rate?

    The federal funds rate is the interest rate banks charge each other for overnight loans to meet their reserve requirements.
  2. Economics

    Explaining the Federal Discount Rate

    The federal discount rate is the rate at which eligible banks or other depository institutions can borrow funds from a Federal Reserve bank.
  3. Personal Finance

    How The U.S. Government Formulates Monetary Policy

    Learn about the tools the Fed uses to influence interest rates and general economic conditions.
  4. Economics

    Regional Banks Give The Fed A National Perspective

    We all know that the Federal Reserve utilizes monetary policy to control the economy, but what do the 12 regional Federal Reserve Banks do?
  5. Economics

    The Ripple Effect: Interest Rates and the Stock Market

    Investors should observe the Federal Reserve’s funds rate, which is the cost banks pay to borrow from Federal Reserve banks.
  6. Credit & Loans

    How The Federal Reserve Affects Mortgage Rates

    The Federal Reserve's actions as it aims to maintain economic stability impact the cost of funds for banks and consequently for mortgage borrowers.
  7. Investing News

    Will 2016 Bring a Bear Market?

    Timing the market is very difficult. Here are the current economic conditions that can hint at when a bear market will arrive.
  8. Mutual Funds & ETFs

    How Interest Rates Affect Mutual Funds

    Find out how changing interest rates impact mutual funds, including bond and money market funds, and how higher rates can discourage investors.
  9. Mutual Funds & ETFs

    Federated Investors: Asset Manager Highlight (FII)

    Take a closer look at the history and key players for Federated Investors, one of the largest investment management companies in the United States.
  10. Investing Basics

    How Interest Rates Affect The Stock Market

    Whether you're buying lunch, a home or a stock, you're influenced by interest rates.
RELATED FAQS
  1. When was the last time the Federal Reserve hiked interest rates?

    Learn about when the U.S. Federal Reserve last increased the federal funds target rate, which was in June 2006 after the ... Read Answer >>
  2. What are the implications of a high Federal Funds Rate?

    Learn the implications of a high federal funds rate, which include constriction of the money supply, a stronger dollar and ... Read Answer >>
  3. Is the prime rate in the US different from the federal funds rate?

    Learn how the federal funds rate affects fluctuations in the prime rate and how following your bank's prime rate can help ... Read Answer >>
  4. What are the implications of a low Federal Funds Rate?

    Find out what a low federal funds rate means for the economy. Discover the effects of monetary policy and how it can impact ... Read Answer >>
  5. How does the stock market react to changes in the Federal Funds Rate?

    Learn how the stock market reacts to changes in the federal funds rate. The fed funds rate is the overnight rate at which ... Read Answer >>
  6. How do open market operations affect the money supply of an economy?

    Understand how open market operation affect the supply of money in the economy and learn the specific ways the Federal Reserve ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center