Federal funds rate
Also called US policy rate, Fed funds target
The rate at which US banks lend each other overnight money; the Fed sets a target range for it, and that range is the US policy rate.
How do the target range and the effective rate differ?
The FOMC sets the federal funds rate as a range whose lower and upper limits are 0.25 percentage points apart, not as a single number. The US policy rate in the news is this target range.
The volume-weighted average of actual trades is the effective federal funds rate (EFFR), published daily by the New York Fed. It usually sits inside the target range.
Whalegun's economic data page shows the target range as a step chart and the effective rate's path.
See it on Whalegun
More terms in this area
- FOMCThe Federal Reserve body that sets the policy rate; it holds eight scheduled meetings a year.
- Dot plotA chart in which each FOMC participant places one dot at the year-end policy rate they think appropriate.
- Consumer Price IndexAn index of the prices urban US consumers pay for goods and services, published monthly by the Bureau of Labor Statistics.
- PCE price indexThe personal consumption expenditures price index, published monthly by the Bureau of Economic Analysis; the Fed's 2% inflation goal is set on it.
- Jobs reportThe Bureau of Labor Statistics report, usually released on the first Friday of the month, with the change in nonfarm payrolls and the unemployment rate.
- US Treasury yieldsThe yields on US government debt, quoted by maturity: the 2-year, the 10-year and others.