Federal funds

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Federal funds

Noninterest-bearing deposits held in reserve for depository institutions at their district Federal Reserve Bank. Also, excess reserves lent by banks to each other.

Federal Funds

Money that a commercial bank in the United States has in excess of its reserve requirement. Banks deposit their federal funds at the Federal Reserve Bank of their district. Federal funds are available for lending to other banks on an overnight basis. The amount of federal funds is seen as a signal of the state of American credit markets, with more money available signaling loose credit and a less indicating the opposite. See also: Federal Funds Rate.

federal funds

Reserve balances that are maintained by commercial banks in the Federal Reserve System at amounts above what is required. These excess reserves are available for lending to other banks in need of reserves. Although the loans are usually made on a single-day basis, they may be renewed. The availability of and the rate paid for federal funds are important indicators of Federal Reserve policy; hence, both are watched closely by financial analysts in order to forecast changes in the credit markets. Also called fed funds.

Federal funds.

When banks have more cash than they're required to in their reserve accounts, they can deposit the money in a Federal Reserve bank or lend it to another bank overnight.

That money is called federal funds, and the interest rate at which the banks lend to each other is called the federal funds rate.

The term also describes money the Federal Reserve uses to buy government securities when it wants to take money out of circulation. It might do this to tighten the money supply in the hope of forestalling an increase in inflation.

References in periodicals archive ?
In reviewing 40 years of data, East and Murphy found seven specific periods of Fed fund rate increases in which five of the seven were good for REITs ownership.
One, the Chicago IMM Eurodollar and Fed Fund futures markets now contradicts the Fed Chairman's pledge because it implies a Fed Funds rate of 0.
While still at historically low levels, the Fed Fund rate increase marks a new cycle of rising borrowing costs across both consumer and commercial sectors.
Analysts look for the Fed to hike the funds rate band 25 bps this month, and while the range of Fed funds estimates may widen from the high side, analysts expect the median dot to remain at 3 tightenings for 2018.
If you use the market-based probabilities of the number of Fed Funds rate hikes along with the current spread between the Fed Funds Rate and the year U.
For our sample excluding the financial crisis (1994-2007), we found that Fed funds surprises had a significant effect on the percent change in the S&P 500 index, but generally had little significant effect on Treasury yields and the trade-weighted dollar.
He said, 'Given my current outlook, I believe that it would be appropriate to wait until 2017 to initiate lift off and then raise the fed funds rate at about 2 percentage points per year.
Historically, the fed funds market has been a key financial market with major macroeconomic and monetary policy implications.
In September, when FOMC participants last estimated where they thought the "appropriate pace of policy firming" would leave the fed funds rate target at the end of next year, the answers were all over the lot.
After today s decision by the Federal Reserve to maintain the target Fed funds rate at zero to 25 basis points, Swiss Re s Chief Economist, Kurt Karl believes that with strong growth in the US economy virtually assured for the rest of the year, the Fed's forward guidance will at first become neutral and then begin hinting about a future tightening.
When that happens, there will be renewed interest in predicting where the fed funds rate will be in the future.