Federal Funds Effective Rate (FFR)
The interest rate at which banks lend reserves to each other overnight. The Fed's Federal Open Market Committee (FOMC) sets a target range for this rate, which serves as the benchmark for short-term interest rates in the economy.
Open Market Operations
The Fed's buying and selling of government bonds to increase or decrease the supply of reserves in the banking system. Buying bonds injects reserves and pushes interest rates down; selling bonds drains reserves and pushes rates up.
Interest on Reserve Balances (IORB)
The interest rate the Fed pays banks on reserves held at the Fed. No bank would lend reserves for less than this rate, making it the effective floor for the federal funds rate.
Primary Credit Rate (Discount Rate)
The interest rate the Fed charges banks that borrow directly from its discount window. No bank would borrow from other banks at a rate above this, making it the ceiling for the federal funds rate.
Overnight Reverse Repurchase Agreement Rate (ON RRP)
The rate the Fed pays when it borrows cash overnight from money market funds and other non-bank institutions, posting Treasury securities as collateral. This extends the interest rate floor to institutions that cannot earn IORB.
Standing Repo Facility Rate (SRF)
The rate the Fed charges banks to borrow cash overnight against Treasury collateral. It serves as a backup ceiling without the stigma associated with the discount window.