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In formulating monetary policy, the Federal Reserve sets a target level
for the federal funds rate, and the Fed's announcements of changes in
monetary policy specify the changes in the Fed's target for that rate.
Movements in the federal funds rate have important implications for the
loan and investment policies of all financial institutions, especially for
commercial bank decisions concerning loans to businesses, individuals, and
foreign institutions. Financial managers compare the federal funds rate
with yields on other investments before choosing the combinations of
maturities of financial assets in which they will invest or the term over
which they will borrow.
Interest rates paid on other short-term financial
securities—commercial paper and Treasury bills, for example—often move up
or down roughly in parallel with the funds rate. Yields on long-term
assets—corporate bonds and Treasury notes, for example—are determined in
part by expectations for the federal funds rate in the future.
Federal Funds Rate History: For Historical Reference Only: Rates and
examples provided by the Federal Reserve System, with a special thank you
to the
Federal Reserve Bank of New York
for their detailed explanation the Federal Funds Rate - shown at the
bottom of each of our pages.
Accuracy of
our information is not guaranteed. Some rates are rounded due mid-month
changes or may contain typographical errors. If you find a
typographical error in the rate table let us know.
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