What is the effective federal funds rate (EFFR)?

The effective federal funds rate (EFFR) is calculated as a volume-weighted median of overnight federal funds transactions reported in the FR 2420 Report of Selected Money Market Rates. The New York Fed publishes the EFFR for the prior business day on the New York Fed’s website at approximately 9:00 a.m.

What is the effective federal funds rate?

Known as the “effective federal funds rate,” this rate is influenced by market factors of supply and demand as well as the Fed. Since the 1980s, the effective federal funds rate has averaged 4.41 percent. The Fed rushed to raise interest rates at the fastest pace since the 1980s as inflation surged post-pandemic.

How does the Federal Reserve determine the price of borrowing money?

Here's an explanation for The Federal Reserve determines the price of borrowing money through one of its primary interest rates, the fed funds rate. The fed funds rate influences various financial decisions and products, such as credit card rates and mortgage rates.