The federal funds rate is

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The federal funds rate is the interest rate that banks charge each other for overnight loans to maintain reserve requirements. The Federal Reserve sets a target range for the federal funds rate, and open market operations are used to adjust the supply of money to keep the rate within that range. This rate has a significant impact on the broader economy, as it influences borrowing costs for businesses and consumers. The interest rate the Fed charges commercial banks is known as the discount rate and is not the same as the federal funds rate. The interest rate a bank charges its best customers or the interest rate on a Treasury Bill are also not the same as the federal funds rate.

The Federal Funds Rate Is