Federal Funds Rate
Returns the effective federal funds rate, the interest rate at which banks lend reserve balances to other banks overnight. This is the primary monetary policy tool of the Federal Reserve.
Data Source
Federal Reserve via FRED.
Usage Notes
- No parameters required
- Returns rate as a percentage
- Data updated daily
- This is the EFFECTIVE rate (actual market rate), not the target
Fed Funds Rate Significance
The fed funds rate is the most important interest rate in the U.S. economy:
| Impact Area | How It Affects |
|---|---|
| Borrowing costs | Higher rate = higher loans, mortgages |
| Savings rates | Higher rate = better deposit yields |
| Asset prices | Higher rate = lower stock/bond prices |
| Dollar strength | Higher rate = stronger USD |
Current Cycle Context
The Fed raises rates to fight inflation and lowers rates to stimulate growth.
Examples
Effective fed funds rate (%)
When to Use
- Tracking Federal Reserve monetary policy
- Interest rate analysis
- Economic forecasting
- Building fixed income models
When NOT to Use
Common Issues & FAQ
Q: Is this the target rate or effective rate? A: This is the EFFECTIVE federal funds rate (actual market rate), which trades close to but not exactly at the Fed's target.
Q: When does the Fed change rates? A: The FOMC meets 8 times per year and can adjust the target range. Rate decisions are announced at 2:00 PM ET on meeting days.
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