Difference between revisions of "Federal funds rate"
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| − | The '''Federal | + | The '''Federal funds rate''' is the rate set by the [[Federal Reserve Board]] that has a strong correlation (direct most of the time) with the [[prime rate]]. It is a lending rate for banks of balances at the Federal Generally lent to other banks. The difference between the federal funds rate and the prime rate is 3 percentage points. |
It is the way the Federal Reserve sets monetary policy and attempts to keep [[inflation]] down while also attempting to avoid [[recession]]s. | It is the way the Federal Reserve sets monetary policy and attempts to keep [[inflation]] down while also attempting to avoid [[recession]]s. | ||
Revision as of 17:58, April 17, 2010
The Federal funds rate is the rate set by the Federal Reserve Board that has a strong correlation (direct most of the time) with the prime rate. It is a lending rate for banks of balances at the Federal Generally lent to other banks. The difference between the federal funds rate and the prime rate is 3 percentage points.
It is the way the Federal Reserve sets monetary policy and attempts to keep inflation down while also attempting to avoid recessions.