This podcast episode explores the Federal Funds Rate (FFR) and how it is controlled by two different rates set by the Federal Reserve (Fed). The FFR is the rate at which banks lend and borrow money overnight, but it is no longer a meaningful interest rate. Instead, the Fed uses the interest rate paid to banks on their deposits and the discount rate charged to banks that borrow from the Fed to guide the FFR. These rates help control the amount of money in circulation and the level of economic activity.
