Fed Funds Rate
The Fed's main lever for the economy. Raising it slows borrowing and cools inflation. Cutting it stimulates borrowing and boosts growth. Affects everything.
Why it matters
The most important interest rate in the world. It anchors all other borrowing costs — mortgages, corporate bonds, credit cards. When the Fed raises rates, borrowing gets more expensive, slowing the economy. When they cut, borrowing gets cheaper, stimulating growth.
How to read it
Rate hiking cycles: bearish for stocks and bonds (higher discount rates, tighter financial conditions). Rate cutting cycles: generally bullish (easier money). Watch the "dot plot" for where Fed members expect rates to go. The market's expectation (Fed futures) vs. actual decisions drives volatility.
Lessons that use this term
Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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