Fed Funds Interest Rates vs. S&P500 Index

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	Fed Funds Rate vs. S&P500 Index Prices Federal Reserve Fed Funds Interest Rates vs Stock Prices
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March 7, 2015: In the United States, the federal funds rate¹ is the interest rate at which depository institutions actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis. 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.

The current target rate for the Fed Funds interest rate is a range between 0.0% to 0.25% and this varies daily with the most recent data between 0.08% and 0.12%.

Graph of Fed Funds Rate vs. S&P500 Index Prices

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Note 1. Source: KirkLindstrom.com private data in Excel
and http://en.wikipedia.org/wiki/Federal_funds_rate

The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.

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