Fed Funds Rate

Fed funds rate means the key short-term interest rate targeted by the Federal Reserve. In simple terms, it is one of the main rates the Fed uses to influence the U.S. economy. The fed funds rate is important because it affects many other interest rates, including loans, credit cards, mortgages, savings rates, and business borrowing costs. When the Fed raises this rate, borrowing usually becomes more expensive. For example, if the Fed raises the fed funds rate, banks may raise interest rates on loans and credit cards over time. The fed funds rate is not the same as every interest rate consumers pay. It influences other rates, but actual loan rates also depend on banks, credit risk, and market conditions.