Federal Funds Rate
a.k.a. Fed funds rate, Fed funds
The overnight rate at which US banks lend reserves to each other, and the main interest rate the Fed targets.
In plain English
The overnight rate at which US banks lend reserves to each other, and the main interest rate the Fed targets.
The federal funds rate is the beating heart of US interest rates. The FOMC sets a target range for it, and almost every other dollar rate, from mortgages to credit cards, moves with it.
When the Fed raises the range, holding dollars pays more and the dollar often firms; when it cuts, the reverse. That is why Fed decisions are among the biggest events in forex.
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