Fed funds target range
Definition · Level 8 · Rates, FX & macro
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The 25 bp-wide band the Federal Open Market Committee (FOMC) sets for the fed funds rate. A 25 bp cut moves both ends down; a 50 bp cut moves both down twice as far.
Example
4.25–4.50% cut by 25 bp → 4.00–4.25%.
Where Tradecraft teaches it
Level 8 · Rates, FX & macro, in the lesson “The Fed and its policy rate”: The Fed’s mandate, the fed funds target range, the FOMC, the dot plot, hawks and doves.
Related terms
- Central bankThe public institution that runs a currency’s monetary policy — setting the short-term policy rate, managing its balance sheet (quantitative easing…
- Dot plotChart in the Fed’s quarterly Summary of Economic Projections showing each policymaker’s view of the appropriate year-end policy rate for the next…
- DovishLeaning toward easier policy (lower rates or more cuts) to support growth and employment.
- Dual mandateThe Fed’s two statutory goals: maximum employment and stable prices.
- Fed funds rateOvernight rate at which US banks lend reserves to each other unsecured.
- FOMCFederal Open Market Committee: the Fed’s rate-setting body.