USD — Federal Funds Rate

The Federal Funds Rate event records the FOMC’s target for the overnight rate at which depository institutions trade reserve balances. In modern practice the Committee usually sets a target range rather than one point; economic calendars commonly display the upper bound of that range, so users should verify the convention before comparing values. The Federal Reserve implements the stance through administered rates and market operations described in its implementation note.

Markets compare the decision with Forecast and, more importantly, with the future path already embedded in interest-rate prices. An unexpected increase or higher-for-longer guidance can lift Treasury yields and USD, while a cut or easier path can do the opposite. A rate unchanged at the expected level may still produce a large move if the statement, vote, projections, balance-sheet plan or press conference changes expectations. The target rate is a policy instrument, not a market forecast, and its effect reaches borrowing, saving and asset prices with lags. Distinguish the target range from the effective federal funds rate, which is a market transaction-based overnight rate published separately. Source: Board of Governors of the Federal Reserve System and Federal Reserve Bank of New York.