Fed Funds Rate
The Federal Funds Rate is the interest rate that institutions like banks use when lending among themselves.
The actual rate is determined in the open market, but the FOMC sets a target Fed funds rate as a guide. The Fed can further influence the actual rate by buying and selling government securities in the financial market.
Latest release
Last target Fed Funds Rate:
Between 0% and 0.25%
The target rate has been between 0% and 0.25% since January 2009, and the FOMC anticipates low levels until at least mid-2013.
Next release
Next FOMC meeting:
Wednesday, June 20, 2012
Binary Options on the Fed Funds Rate open at 8am (ET time) on the first business day of the week prior to the next FOMC meeting.
Trading the Fed Funds Rate with Binary Options
A typical Fed Funds Rate Binary Option contract may be: Fed Funds Rate <= 0.25%
If you believe the new target rate will be less than or equal to 0.25%, you Buy this Binary Option.
If you believe the new target rate will be greater than 0.25%, you Sell this Binary Option.
More about the Fed Funds Rate
The Fed Funds Rate is one of the Fed’s key tools in implementing monetary policy. The broad goals of monetary policy include:
- Sustainable economic growth
- Full employment
- Stable prices
Investors keep a keen eye on FOMC meetings, because the outcome could have wide-ranging implications for the dollar and general economic growth. The target rate itself is important, but investors also watch out for details of how members voted and any warning, or bias, offered in the report.
The FOMC normally meets eight times a year to agree the target rate, but may meet additionally if required.
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