Forex Dictionary

Federal Funds Rate

Federal Funds Rate

Measures Interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight; A rising ternd has positive effect on the nation currency. It is important because the short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future; Derived Via The 10 members of the FOMC vote on where to set the rate;