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Federal Funds Market |
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Federal funds market The market in which banks can borrow or lend reserves, allowing banks temporarily short of their required reserves to borrow reserves from banks that have excess reserves. Federal Funds Market The market for loans that the Federal Reserve makes to member banks. The fed funds market is an indicator of the direction in which the Federal Reserve is trying to push the broader economy. In general, if the Federal Reserve has a low interest rate range in the fed funds market, this indicates that it is trying to promote growth by making liquidity easily available; a high interest rate shows that the Fed is concerned about inflationary pressures on the economy and is trying to reduce the amount of money in the economy. Along with the sale of Treasury securities and determining the discount rate, influencing the federal funds market is one of the primary ways the Federal Reserve sets the monetary policy of the United States. See also: LIBOR. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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