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.
Schenk predicted that subsequent increases of 25 basis points will be announced during the FOMC meetings in September, October and November, for a total Fed fund rate increase of 1% by year-end 2015.
Our results for the complete sample period of 1975-2016:6 suggest that the LMI and the near-term probability of inflationary pressure are statistically useful to explain movements in the fed fund rate.
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 0.65 or at least one, possibly two tightening by late 2013.
Fed funds futures rallied on the ISM data and the drop on Wall Street as the market prices in more Fed easing.
The target for the fed funds rate was adjusted down by 25 basis points (bps) to 2-2.25 percent.
Summary: New York [USA], Aug 1 (ANI): The cut in US Fed funds rate is credit negative for American banks, applying renewed pressure on net interest margins (NIMs) and profitability that could stimulate further consolidation of the sector, Moody's Analytics said on Thursday.
The Fed Funds rate, the differential between EM and developed-market (DM) GDP growth, global risk appetite (proxied by the VIX measure of equity market volatility) and the US dollar are key global drivers of EM capital flows.
That's what the Federal Reserve is attempting to do as the fed funds rate inches closer to the top of the central bank's target range.
Abstract This paper proposes a new framework that identifies a threshold between the fed funds rate and the 10-year Treasury yield and, when the threshold is breached, the risk of a recession in the near future is significant.
* Before the 2007-09 financial crisis, the Fed's operating framework for monetary policy reflected a banking system in which the scarcity of reserves meant that small changes in reserves would affect fed funds rates.
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.S.