Federal Funds Rate¶
The federal funds rate is the overnight interest rate at which U.S. banks lend reserve balances to each other at the Federal Reserve. The FOMC sets a target range — expressed in 25-basis-point increments — and uses administered rates to keep the effective federal funds rate (EFFR) inside that band. It is the shortest-maturity rate in the U.S. financial system and the foundational anchor for all other borrowing costs, from the prime rate to SOFR.
HOW IT WORKS¶
The EFFR is a volume-weighted median of overnight unsecured interbank transactions, published each morning by the New York Fed. The Fed steers it using two administered rates: the Interest on Reserve Balances (IORB), which acts as a floor by paying banks a risk-free return on reserves, and the Overnight Reverse Repo (ON RRP) rate, which captures non-bank cash that could otherwise undercut the range. The discount rate sits above the range as a ceiling. Rate changes transmit rapidly across the curve — the prime rate tracks fed funds nearly one-for-one, mortgage rates and auto loans reprice with a lag, and equity markets often move on Fed guidance before a hike or cut is formally delivered.
IN TAPEBOARD¶
Tapeboard surfaces fed funds rate expectations as a live input to sector and macro positioning. Use the rate path overlay to visualize the current FOMC target range alongside historical hiking and cutting cycles. CME FedWatch-derived probabilities for the next FOMC meeting are displayed in the macro dashboard, letting you assess whether a move is already priced in before sizing a trade. Equity screeners can be filtered by rate sensitivity — REITs, small caps, and utilities flag as rate-exposed when the implied path shifts toward cuts, while bank net-interest-margin screens activate on hike cycles. FOMC meeting dates are marked as volatility events on all chart views, with implied move estimates drawn from S&P 500 options pricing.