We decode Fed-speak to give you -- in concise, everyday language -- a translation of the central bank’s announcement that it is pushing up interest rates for only the second time since the Great Recession. Read more
Federal funds rate
The interest rate at which banks lend money to one another overnight to meet loan reserve requirements. The federal funds rate is a tool used by the Federal Reserve to control the supply of available money and hence, inflation and other interest rates.
Raising the rate makes it more expensive to borrow. That lowers the supply of available money, which helps keep inflation in check. Lowering the rate has the opposite effect.