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Additional
federal funds rate
English Wikipedia - The Free Encyclopedia
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Federal funds rate
In the
United States
, the
federal funds rate
is the
interest rate
at which
depository institutions
(banks and credit unions) lend reserve balances to other depository institutions overnight, on an
uncollateralized
basis.
Reserve balances
are amounts held at the
Federal Reserve
to maintain depository institutions'
reserve requirements
. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in
financial markets
.
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