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What is federal fund? Is it more like money or mutual fund?


What is federal fund? Is it more like money or mutual fund?

No, it's nothing like a mutual fund. The Federal Funds Rate (as opposed to the "discount rate") is the Federal rate that banks charge other banks for overnight loans.

The "discount rate" is the rate Federal Reserve banks charge other banks for overnight loans.

The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Current rate after the increase on Jan 31, 2006 is 4.50%

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