What is the Federal Reserve Rate

The Federal Reserve’s benchmark interest rate, also known as the refinancing rate or rediscount rate.

The base rate plays a central role in the overall interest rate system and can constrain other interest rates.

In terms of maturity, the Fed‘s interest rate is the interest rate on Treasury bills (3 months, annualized).

The Fed rate is the policy rate and the target rate, which is the goal of the United States.

The Fed achieves this rate through operations. When the market rate is above the target, the Fed will buy short-term Treasury bonds and issue them to bring the rate down to the target range, and when the market rate is below the target, the Fed will do the opposite.