Sep 18, 2024
Today, the Federal Reserve announced a 0.50 percentage point decrease in the target for the federal funds rate — lowering the target range to 4.75 to 5.00 percent. Prior to today, the Federal Reserve had held the federal funds rate, which is the interest rate at which commercial banks lend to one another overnight, steady since July 26, 2023. The federal funds rate is used by the Fed to help control inflation, but the rate also has implications for the federal government’s borrowing costs and therefore the nation’s fiscal picture.
The federal funds rate is the benchmark for Treasury bills and other short-term securities. Adjusting the rate is an important tool for the Federal Reserve to help achieve their statutory mandate, which is to promote the goals of maximum employment, stable prices, and moderate long-term interest rates. Expectations about the short-term rates, combined with other…
