The Federal Reserve uses the federal funds rate as an operating target because

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The federal funds rate is the interest rate that banks charge each other for overnight loans of their excess reserves held at the Federal Reserve. It is a key monetary policy tool used by the Federal Reserve to influence the money supply and credit conditions in the economy. The federal funds rate is a good operational target for the Fed because it is sensitive to changes in the level of bank reserves and can be directly influenced by the Fed's open market operations. Additionally, changes in the federal funds rate have an impact on other interest rates in the economy, including consumer and business loan rates, making it an effective tool for influencing overall economic activity. The federal funds rate is not determined by the Treasury, and while changes in the rate can impact inflation, it is not necessarily a direct indicator of inflation.

The Federal Reserve Uses the Federal Funds Rate as an Operating