Economic Charts

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Tuesday, September 28, 2010

Fed Funds Rate Sinks

The Federal Reserve Funds Rate is the interest rate at which depository institutions lend to each other overnight.  The Fed Funds Rate is effected by the New York Feds trading of government security.  This reduction in the Fed Funds Rate will also make it cheaper to lend, but also punish savers, as your money will earn less interest.  Obviously the FED is trying to bolster lending and spending to get our economy jump started.  Unfortunately, those that want the money, most likely can't qualify anymore and those that don't need the money aren't looking to take on more debt if they can survive without it.  This is an attempt to get banks lending again as it is putting banks in a bind for revenue when they cannot lend.

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