Definitions for: federal funds rate
federal funds rate
interest rate charged by banks with excess reserves at a Federal Reserve district bank to banks needing overnight loans to meet reserve requirements. The rate is determined by the balance of supply and demand for funds, which is influenced by open-market operations pursuant to decisions made by the Federal Open-Market Committee(FOMC). The FOMC establishes a target rate and expands or contracts the money supply with the aim that the federal funds rate, a market rate, will approximate the target rate.
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