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.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The 30-day federal fund futures contract is an interest rate derivative, which has been traded on the Chicago Board of Trade since October 3, 1988.
WASHINGTON, March 21 (KUNA) -- The US Federal Reserve decided Wednesday to raise the target range for the federal funds rate to 1.5 to 1.75.
Although monetary policy has focused on setting an appropriate level for the federal funds rate since well before the financial crisis, the mechanics since the crisis have changed.
Figure 1 graphs the evolution of the nominal effective federal funds rate, inflation, and a survey measure of long-term inflation expectations.
In support of a 2015 federal measure that lifted a longstanding ban on using federal funds for syringe services programs, the U.S.
SEEKING MORE FEDERAL FUNDS. Puerto Rico's chronic inability to fully tap into federal funding has shortchanged the island out of millions in competitive grants and loans available for a cross-section of activities, reports News Is My Business (June 16, 2014).
Baptist Community Ministries asked The Finance Project to examine the expenditure of federal funds for job training and education of New Orleans' disconnected young adults (i.e., persons between ages 16 and 24 who are not in school or work).
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.
23, a federal judge handed down a ruling that barred the use of federal funds for any research involving human embryonic stem cells.
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.

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