The Fed raised rates for the third time this year, bringing
the benchmark Fed Fund Target Rate to 1.25 % -1.50 %, as expected.
The economy may be healthy enough for them to raise interest rates, but the new 0.5 percent to 0.75 percent target for
the benchmark fed funds rate, up a quarter point from where it had been, remains far below the historical norm — and, by all indications, the Fed still expects rates to stay low for at least a few more years.
When the Federal Reserve started cutting
its benchmark Fed Funds Rate, savings account rates began suffering.
Not exact matches
Though the
Fed has been in a slow rate - hiking pace since December 2015 — the December 2017 increase was the fifth in the current cycle — its
benchmark funds rate remains targeted at just 1.25 percent to 1.5 percent.
Historically, the
Fed has responded to recession by cutting rates substantially, with the
benchmark funds rate falling by 400 basis points or more in the context of downturns over the past two generations.
The
Fed has a dual mandate to maximize employment and stabilize inflation, which it tries to achieve primarily by pushing up or down the federal
funds rate, the
benchmark short - term financing cost for banks that influences a wide range of borrowing rates for households and businesses.
On March 31st the Federal Reserve raised its
benchmark interest rate for the sixth time in 3 years and signaled its intention to raise rates twice more in 2018, aiming for a
fed funds target of 3.5 % by 2020.
The US Federal Reserve didn't find a compelling reason to raise interest rates at its March policy meeting, maintaining its
benchmark short - term interest rate (
fed funds rate) in the range of 1/4 to 1/2 percent.
But in their most recent policy meeting,
Fed officials stated they could raise the federal
funds benchmark sometime this year, possibly during the second quarter.
One of the
Fed's most - used tools that it relies on to influence the economy is the federal
funds rate — also known as the
benchmark interest rate.
According to CME Group's
Fed Watch tool, traders are pricing in a roughly 80 percent chance that the
Fed announces a 0.25 percent hike to the
benchmark federal
funds rate on Wednesday afternoon.
Benchmark interest rates, such as the LIBOR and the
Fed funds rate, affect the demand for money by raising or lowering the cost to borrow — in essence, money's price.
The
Fed's go - to move is tweaking its target for the federal
funds rate, which is what banks charge one another for loans and the
benchmark for our rates on mortgages, credit cards and other debts, as well as savings accounts, CDs and Treasury bonds.
Benchmark interest rates, such as the LIBOR and the
Fed funds rate, affect the demand for money by raising or lowering the cost to borrow — in essence, money's price.
Interactive Brokers calculates an internal
funding rate based on a combination of internationally recognized
benchmarks on overnight deposits (ex:
Fed funds, LIBOR) and real time market rates as traded, measured, in the interbank short - term currency swap markets, the world's largest and most liquid market.
The
Fed's discount window has three different facilities and associated rates; the
benchmark primary credit rate currently stands at 6.25 %, 1.00 % above the Federal
Funds target rate; the secondary and seasonal credit rates exceed the primary rate.
With inflation ticking higher and the employment situation improving, the Federal Reserve anticipates gradually lifting the
benchmark federal
funds rate in 2017 and 2018.1 Officials are also discussing plans to shrink the
Fed's huge bond portfolio ($ 4.5 trillion).
One of the
Fed's most - used tools that it relies on to influence the economy is the federal
funds rate — also known as the
benchmark interest rate.
APRs to go up as
Fed raises interest rates — Interest rate setters at the Federal Reserve raised their
benchmark federal
funds rate for just the second time in 10 years... (See
Fed)
The
Fed lowered the federal
funds rate — a key interest rate
benchmark that affects most consumer loans — down to zero in 2008 and has yet to raise it.
But in their most recent policy meeting,
Fed officials stated they could raise the federal
funds benchmark sometime this year, possibly during the second quarter.