Fed funds

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US banking.

Fed funds ("Federal funds") are funds deposited by commercial banks at Federal Reserve Banks, including funds in excess of bank reserve requirements.


Banks may lend federal funds to each other on an overnight basis to help the borrowing bank satisfy its reserve requirements or liquidity needs.

This lending will be at the lender's "federal funds rate".

The Federal Reserve calculates and publishes the "effective federal funds rate" (EFFR) as a weighted average of the reported transaction rates for each business day.


See also