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fed funds |
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fed funds A range of interest rates at which the Federal Reserve makes overnight loans to member banks. The fed funds rate is not one specific interest rate but a range around a certain target rate. The fed funds rate is an indicator of the direction in which the Federal Reserve is trying to push the broader economy. In general, a low interest rate range indicates that it is trying to promote growth by making liquidity easily available, and a high interest rate shows that the Fed is concerned about inflationary pressures on the economy and trying to reduce the amount of money in the economy. Along with the sale of Treasury securities and determining the discount rate, setting the fed funds rate is one of the primary ways the Federal Reserve sets the monetary policy of the United States. See also: LIBOR. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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After 17 consecutive one-quarter point interest rate hikes, Federal Reserve governors voted to leave the Fed Funds rate at 5. The strong consensus view is that the Federal Reserve will raise the target Fed funds rate 25 basis points at the December 13 FOMC meeting. short-term interest rates at extraordinary lows (at one point the Fed funds rate was set at 1 percent), financial institutions would borrow on the short end of the yield curve and buy the long end, guaranteeing a nice profit even before taking any risk. |
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