Glossary term

Fed funds rate

The federal funds rate is the short-term interest-rate target set by the Federal Reserve to influence financial conditions and inflation.

Reviewed April 4, 2026

By Emily Carter • Markets Editor

The fed funds rate sits at the short end of the rate system, but its influence runs much wider. When the market expects that rate to stay higher for longer, borrowing costs, bond prices, and equity valuations can all respond.

That is why “the Fed held rates steady” is rarely the full story. The path implied by the statement, projections, and press conference often matters more.

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