Glossary term
Fed Funds Rate
The US central bank's overnight policy rate; the anchor for all dollar-denominated financial conditions.
The Fed Funds Rate is the overnight interest rate the U.S. Federal Reserve targets to set monetary policy, the anchor from which nearly all dollar-denominated borrowing costs derive. Raising it tightens financial conditions and pressures risk assets; cutting it eases conditions and supports them. It is the single most consequential policy variable for global markets. See Money Temperature 101.