# fed funds rates Summary::The rates for interbank overnight loans. The Fed funds rate could be the most misunderstood interest rate in the financial market. It's the rate that's established by Interbank overnight loan transactions, which exist in a closed market. Even if the market were open Fed funds amounts to a very small portion of bank liabilities. In the past the Fed funds rate acted as a bellwether. If the demand for bank loans was high, the quantity of excess reserves would decline significantly. With bank reserves at a low quantity banks would pay very high rate to balance their reserve accounts. When Ben Bernenke flooded bank reserves the pressure on bank reserves was virtually eliminated, causing Fed funds rates to dropped to near zero. --- # Notes **What is the fed funds rate?** What is interest & interest rates? What determines interest rates? Interest rate dynamic **Interest Rate Dynamic** Note that the dynamic of interest rate determination is the same in the fed funds market as it is in the open financial market. These are, however, separate markets. --- # References Posted::[[Who Cares About Fed Funds Rate]] [[Fed Starts to Raise Rates]] [[Factors Influencing Fed Funds Rate]] [[Fed Overnight Rate]] # Publication [Who Cares About Fed Funds Rate](https://freemarketcenterjournal.com/2023/05/17/who-cares-about-fed-funds-rate/) [[fed funds rates]]