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Federal Funds Rate

The US benchmark interest rate set by the Federal Reserve.

In depth

Rate at which banks lend reserves to each other overnight. Sets the floor for all USD interest rates. The Fed targets a range (e.g., 5.25-5.50%) and uses open market operations to keep effective rate within. Policy decisions made at FOMC meetings (8 per year).

Frequently asked about Federal Funds Rate

What is Federal Funds Rate?

The US benchmark interest rate set by the Federal Reserve. Rate at which banks lend reserves to each other overnight. Sets the floor for all USD interest rates. The Fed targets a range (e.g., 5.25-5.50%) and uses open market operations to keep effective rate within. Policy decisions made at FOMC meetings (8 per year).

Why does Federal Funds Rate matter for investors?

In economics, Federal Funds Rate is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.

How is Federal Funds Rate used in practice?

Rate at which banks lend reserves to each other overnight. Sets the floor for all USD interest rates.

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