The FRED Federal Funds Effective Rate is a measure of the overnight interest rate at which depository institutions (such as banks and credit unions) lend and borrow funds from each other in the United States. The rate is published by the Federal Reserve Bank of St. Louis through its Federal Reserve Economic Data (FRED) system.
The Federal Funds Rate is an important tool used by the Federal Reserve to control the supply of money in the economy and influence economic growth and inflation. The Federal Reserve sets a target range for the Federal Funds Rate, and the actual rate is determined by supply and demand in the market for overnight loans between banks.
The FRED Federal Funds Effective Rate is calculated by taking a weighted average of the interest rates charged by banks for overnight loans, based on the volume of loans made by each bank. The rate is published daily by the Federal Reserve Bank of New York and is widely used as a benchmark rate for other short-term interest rates, such as the prime rate and adjustable-rate mortgages.
Changes in the FRED Federal Funds Effective Rate can have a significant impact on the economy, as they can affect the cost of borrowing for businesses and consumers, as well as the value of the U.S. dollar in international markets. The rate is closely watched by investors, economists, and policymakers as a key indicator of the health of the U.S. economy.