Fed Funds Explained

The financial press makes a big deal about whether the Federal Reserve will either leave the fed funds rate where it is, raise it, or get really silly, and drive interest rates below zero. In making these comments, however, they seem to assume that everyone understands the fed funds market and how it operates.

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Fed Funds Market Dynamics

Can the Fed actually control interest rates? And, does the fed funds rate actually have a significant influence on broader market interest rates?

To answer these questions one must first understand what is the fed funds market and how does it operate. To help you gain this understanding I have put together a presentation entitled “Fed Funds Explained.” You can find that presentation at this link: Fed Funds Explained.

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