Federal funds rate

The federal funds rate is the interest rate at which depository institutions lend balances (federal funds) at the Federal Reserve to other depository institutions overnight. It is the primary means by which the Federal Reserve implements monetary policy. Other tools at the Fed's disposal include open market operations (buying and selling bonds) and setting the reserve requirement.

The nominal rate is a target set by the governors of the Federal Reserve. The effective rate is a weighted average of the reported rates at which different amounts of the day's trading occurs through New York brokers.

Rate

See also

• Discount rate

External links

• FRB: Monetary Policy, Open Market Operations

See also: Federal funds rate, Broker, Depository institutions, Discount rate, Economics, Federal Reserve, Federal funds, Finance, Interest rate