Plain-English definitions, reviewed by an independent investor
Federal Funds Rate
The federal funds rate is the key U.S. policy rate banks charge each other overnight, set by the Fed.
The federal funds rate is the key U.S. policy rate banks charge each other overnight, set by the Fed.
(Target rate on overnight interbank loans)
Why it matters
It is the lever the Fed pulls to steer inflation and growth.
Common confusion
It only directly sets one rate; the whole curve follows from expectations.
Frequently Asked Questions
How does it hit my portfolio?
It ripples into mortgages, bonds, and stock valuations.
Who changes it?
The central bank’s rate-setting committee, on a scheduled calendar.