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What is the federal funds target rate which is set by the federal open market?
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∙ 14y ago
.25%
Wiki User
∙ 14y ago
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Who sets prime rate?
the Federal Open Market Committee (FOMC),
Where can someone learn about market funds?
A money market fund is an open-ended mutual fund that invests in short-term debt securities and commercial paper. Money market funds are widely regarded as being as safe as bank deposits yet providing higher yield. One can learn more about money market funds at a website called "Investopedia".
What is the term for the federal reserves buying and selling of U.S. treasury bonds?
open market A+
When the federal reserve conducts an open market purchase of government bonds the money supply will?
5
What is the function of the Federal Reserve Bank?
The function of the Federal Reserve Bank is responsible for carrying out monetary policy as set by the Federal Open Market Committee. They are 12 Reserve banks
What if the Federal Open Market Committee chooses to decrease the money supply the Federal Reserve would?
lower the target rate for the federal funds rate
What is approximate value of funds held in the open market reserve account of the Federal Reserve Bank of New York?
The approximate value of funds held in the open market reserve account of the Federal Reserve Bank of New York is $496 billion.
Open market purchase will result in?
increase in bank reserves and a decrease in the federal funds rate
When was Federal Open Market Committee created?
Federal Open Market Committee was created in 1933.
What is the federal funds overnight rate?
The federal funds rate is the rate which banks charge one another for overnight loans used to provide needed capital to meet reserve requirements. The federal funds rate is the rate which the federal reserve may adjust thru open market operations such as the buying and selling of US treasuries. As of March 2010, the federal funds rate hovers between 0 and .25%.
How are prime interest rates determined?
The Federal Funds Rate, which is the interest rate banks charge each other, is determined eight times a year by the Federal Open Market Committee (FOMC). The prime interest rate usually runs about 3% above the Federal Funds Rate.
What is the federal fund rates?
The federal funds rate is the rate which banks charge one another for overnight loans used to provide needed capital to meet reserve requirements. The federal funds rate is the rate which the federal reserve may adjust thru open market operations such as the buying and selling of US treasuries. As of March 2010, the federal funds rate hovers between 0 and .25%.
How does FOMC achieve Fed Fund Rate targets?
Extracted from http://www.federalreserve.gov/generalinfo/faq/faqmpo.htm The federal funds rate is the rate charged by one depository institution on an overnight sale of immediately available funds (balances at the Federal Reserve) to another depository institution; the rate may vary from depository institution to depository institution and from day to day. The target federal funds rate is set by the Federal Open Market Committee (FOMC). By setting a target federal funds rate and using the tools of monetary policy--open market operations, discount window lending, and reserve requirements--to achieve that target rate, the Federal Reserve and the FOMC seek "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates," as required by the Federal Reserve Act. At each of its meeting, the FOMC examines a number of indicators of current and prospective economic developments. Then, cognizant that its actions affect economic activity with a lag, it must decide whether to alter its target for the federal funds rate. An actual decline in the rate stimulates economic growth, but an excessively high level of economic activity can cause inflation pressures to build to a point that ultimately undermines the sustainability of an economic expansion. An actual rise in the rate curbs economic growth and helps contain inflation pressures, and thus can promote the sustainability of an economic expansion; too great a rise, however, can retard economic growth too much. The FOMC's actions on the target federal funds rate are undertaken to achieve the maximum rate of economic growth consistent with price stability and moderate long-term interest rates. Extracted from http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2006/0604.html Specifically, to lower the fed funds rate, the Fed will instruct the open market desk in New York to purchase Treasury securities on the open market, which in turn infuses money into the banking system and thus moves the effective federal funds rate or price of those reserves down.
Fed participation in open market activities?
what is the federal partcipation in open market activities??
What is the difference between the federal funds rate and the discount rate?
Financial and banking jargon is particularly arcane and confusing because different people use different terms for the same ideas, concepts, and rates. Other terms sound the same but are different. The federal funds rate, for example, is sometimes called the federal funds target rate or the intended federal funds rate. The latter two terms are more descriptive, because both imply that the Federal Reserve does not have direct control over the rate. The actual federal funds rate is the weighted average of interest rates that banks charge each other. It's set by open market competition but comes remarkably close to the target set by the Fed. The discount rate, in contrast, is usually about a half to a full percentage point higher than the federal funds rate. The Federal Reserve does control that one. The discount rate is the interest rate the Federal Reserve charges other depository institutions for very short-term (usually overnight) loans.
What does the federal open market committee make when it meets?
The Federal Open Market Committee within the Federal Reserve System oversees the nations open market operations. The Committee makes the key decisions about interest rates and the growth of the US money supply.
How might the federal reserve to an overheated economy or boom?
The Federal Reserve respond to an overheated economy or boom by selling bonds in the open market.
