federal funds rate

Savers suffering as rates fall--what to do

Posted April 4, 2008 - 05:33 by Philip Brewer

Investment

Federal funds rate and savings interest rates both drop

Interest rates for ordinary savers held up pretty well after the first Fed rate cut in July last year.  There was a simple reason--banks needed the money.  With the credit squeeze making it tough for banks to raise cash, the last thing they wanted was for savers to draw their money out in search of higher returns.  The Fed's efforts to relieve the squeeze have been somewhat successful--banks have substantially cut the rates they'll pay savers.

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Federal Reserve cuts the discount rate

Posted August 17, 2007 - 16:59 by Philip Brewer

Personal Finance

In response to the recent credit squeeze, the Federal Reserve did something unusual: they cut the discount rate without cutting the federal funds rate. The federal funds rate is the rate at which banks lend to one another. The discount rate is the rate at which the Fed itself will lend money to banks. For the past few years, the Fed has closely coordinated changes in these rates, so to change one without changing the other is a departure.

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