Federal funds market rate is:

Question

Quizplus · Accepted Answer

The federal funds market rate is the interest rate at which banks lend to each other to meet their reserve requirements. This market rate is determined by the supply and demand for overnight funds, and it influences other short-term interest rates in the economy. The central bank may also influence this rate through its open market operations, but it does not directly provide funds to commercial banks at this rate. The rate charged by banks on loans to the public (prime rate) is different from the federal funds rate, and the federal funds rate is not necessarily higher than the discount rate, which is the rate at which banks borrow from the central bank.

Federal Funds Market Rate Is