The federal funds rate is the target interest rate range set by the US Federal Reserve's Federal Open Market Committee at which commercial banks lend their excess reserve balances to one another overnight, and it is the primary tool through which the Federal Reserve conducts monetary policy, influencing borrowing costs throughout the broader economy from mortgage and credit card rates to corporate lending. Set at scheduled FOMC meetings roughly eight times a year since the modern federal funds rate target framework took shape in the 1980s and 1990s, changes in the rate, raised to cool an overheating or inflationary economy and lowered to stimulate a slowing one, are among the most closely watched decisions in global financial markets.
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