Current Fed Rate How Does The Fed Establish Interest Rates, What Are The Current Rates And What Does It Mean To Inflate Rates?

How does the Fed establish interest rates, what are the current rates and what does it mean to inflate rates? - current fed rate

The Federal Reserve controls interest rates very special - the so-called federal funds rate. This is the rate banks charge each other when they lend each other money overnight. (Say, Tuesday, has the bank any surplus cash, bank B but is below the level of reserves. So, he borrows from A to B need until you get the opportunity to have a balanced their reserves for the next business day) .

Now the Fed has no control over this type directly. The Fed has publicly announced to observe the type of target, but not the banks that the prices, because only the U.S. Federal Reserve says it is the goal. It is the law.

But what makes the U.S. Federal Reserve intervened, the bank from day to day on the bank loan market, the need ... Interventions in supply and demand for interbank currency until the price is where the Fed wants tothe (money = interest) costs.

The way the Fed will intervene by buying or selling U.S. Treasury bonds from banks, so that a recording or distribution of cash or a bank, so that more or less liquidity. This is called "open market operations.