The federal funds rate is the interest rate banks charge to lend reserves to other banks, which can be lowered by the fed buying U.S. government securities.

Question

Quizplus · Accepted Answer

The Federal Reserve influences the federal funds rate by buying and selling U.S. government securities, which affects the reserves of the banking system. Buying securities increases reserves and typically leads to a lower federal funds rate.

The Federal Funds Rate Is the Interest Rate Banks Charge