One important aspect of U.S. monetary policy implementation is to control a short-term interest rate known as the federal funds rate (FFR), keeping it within the target range set by the Federal Open Market Committee (FOMC). The FFR is the equilibrium interest rate in the federal funds market. The federal funds market allows financial institutions, primarily banks, to borrow or lend funds, usually in the form of bank reserves. Bank reserves (or simply reserves) are funds that are deposited by banks with the Federal Reserve. Lenders in the federal funds market are banks that have excess reserves while borrowers are ... (full story)