The Economy & the Fed

Federal Funds Rate

The interest rate banks charge each other for overnight loans, and the rate the Federal Reserve targets when it “raises” or “cuts” rates. It is the starting point for almost every other rate: credit cards, car loans, savings accounts and business loans all tend to move with it. A higher federal funds rate makes borrowing more expensive, which slows spending and, over time, inflation; a lower one does the opposite. It is announced as a range, such as 4.25% to 4.50%.

Educational information, not investment advice. See it applied across the screener →