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 ?
The weeks prior to the May 10, 2006, FOMC meeting were unusually active ones in the federal funds futures and options markets.
The Federal Open Market Committee decided on November 1, 2005, to raise its target for the federal funds rate 25 basis points, to 4 percent.
Of course, to ensure that the "real" federal funds rate rises, the FOMC must raise the federal funds rate by more than the increase in inflation.
During the 1980s and 1990s, attacks on Title X and legalized abortion riled pro-choice liberals and family planning organizations supported in part by decreasing federal funds. Over the years, these groups have become a considerable political force.
Previous research has shown the federal funds futures market to be a relatively good forecaster of changes in the fed funds rate on average.
Who will keep my church, or any other, from slipping federal funds from one pocket to another?
Prior to 1994, for example, the Federal Open Market Committee (FOMC) used an operating procedure that targeted borrowed reserves and yielded a federal funds rate objective that was difficult to elucidate even well after the fact (Cook, 1989).
In light of recent allegations of misuse of federal funds in an agency in Puerto Rico responsible for administering, among other things, federal funds provided for its Medicaid program, it is important to understand where Puerto Rico stands with respect to federal funding and our ability to perform oversight and ensure accountability.
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.

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