Federal funds rate

The federal funds rate is the interest rate that the government charges banks for borrowing money. This money is then used to help banks lend money to people, such as you and I, who need to borrow money, like when we buy a car or a house. Whenever the federal funds rate is changed (raised or lowered), it affects how much money it costs to borrow. When the rate is lowered, borrowing money can become cheaper, which can help people buy things and help the economy to grow. When the rate is raised, borrowing money can become more expensive, which can help stop the economy from becoming too much and help prevent people from buying too much and getting into too much debt.