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.

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