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 public discourse on the future course of the federal funds rate, the Taylor rule serves as a very common benchmark.
Consolidated Federal Funds Report: 2010 and Federal Aid to States for Fiscal Year 2010 - These two reports provide an overview of virtually all federal spending at the national, state and county levels.
The effects of these events can be seen in the trends of not only the federal funds market, but also the repo, commercial paper, Libor, and Eurodollar markets.
According to the textbook view, the Federal Reserve controls the federal funds rate by varying the supply of reserves available to the banking system.
This report responds to Congress' request for information on federal funds provided for fiscal years 2002 through 2009 to selected organizations involved in health-related activities and their affiliates: Advocates for Youth, the Guttmacher Institute, the International Planned Parenthood Federation, the Planned Parenthood Federation of America, the Population Council, and the Sexuality Information and Education Council of the United States.
Some 65 FBI agents and investigators from the US Dept of Education stormed into the local Education Dept in search of documents and information about an alleged federal funds fraud scheme, reports The Puerto Rico Daily Sun (March 3, 2010).
The Federal Reserve's main operating target in conducting monetary policy has been, for many years, the federal funds rate, which is the interest rate financial institutions charge each other in the interbank market for short-term (usually overnight) loans.
Ted Stevens, the Alaska Republican most famous for his Bridge to Nowhere, constructed out of $233 million in federal funds.
Representatives of women's groups were told that new federal guidelines for funding will prohibit them from engaging in any advocacy or lobbying activities with federal funds.
The Federal Open Market Committee decided on September 20, 2005, to raise its target for the federal funds rate 25 basis points, to 3 3/4 percent.
Only three states, California, Arizona, and Pennsylvania chose to not take federal funds for abstinence-only programs.
FOLLOWING THIS WARNING, our discussions turned to monetary policy--the setting of a target for the federal funds rate.

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