Fed Funds Rate Now 0.25% or Lower

The Federal Funds Target Rate was reduced today to 0.25% or Lower.  They now have a target range of 0.00% to 0.25%.  See http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm

This is a historical low for the Federal Funds Target Rate.  The Fed Funds Target Rate is a short-term rate objective of the Federal Reserve Board.  The actual Fed Funds Rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.  The real rate changes daily but is usually close to the target rate desired by the Federal Reserve.  Lately the actual rate has been considerably lower.  For example, last month the target rate was 1.00%, but actual rate averaged .39%.  Yesterday, the target rate was 1.00%, but the actual rate was .11%.  You can find the actual rate at https://www.moneycafe.com/markets/interestrates.htm?qm_target_page=Rates.  The symbol is !FFUNDS.

We now anticipate the Prime Rate will be lowered by banks today to 3.25% and will update upon completion of our bank survey.

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