United States - Interest rates: Federal funds target rate - Range midpoint

Eight times a year, the Federal Open Market Committee (FOMC) meets to discuss U.S. monetary policy and set key policy interest rates: the federal funds target rate and the discount window borrowing rate.

The FOMC consists of the five members of the Board of Governors of the Federal Reserve System, plus the presidents of five of the twelve Federal Reserve Banks. It convenes at eight regular meetings per year, and more often if necessary.

The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. The FOMC sets a target rate (in effect, a desired price for lending), but member institutions may lend at whatever rate they can negotiate (the effective rate).

The discount rate is the interest rate charged to commercial banks and other depository institutions on short-term loans they receive from their regional Federal Reserve Bank's lending facility, known as the discount window. There are three discount window programs (primary credit, secondary credit, and seasonal credit), each with its own rate; because primary credit is the most-used, it's usually known as "the" discount rate.

The FOMC meets eight times a year.  Their rate decision is announced on the second day of the meeting, at either 12:30 or 2:15 p.m. ET.  The minutes of the meeting are published several weeks later.

These Data Buffet business-daily time series have a value on every day:

• JRFEDD.US - federal funds target rate
• JRFEDHD.US - range high
• JRFEDLD.US - range low
• JRDISCD.US - federal discount window rate

 These corresponding series have a value only on the decision dates:

• JRFEDXD.US - federal funds target rate
• JRFEDXHD.US - range high
• JRFEDXLD.US - range low
• JRDISCXD.US - federal discount window rate

The U.S. monetary policy target rates (JRFEDD.US, JRDISCD.US) are not subject to revision.

The effective federal funds rate (IRFEDD.US) is based on trades reported to FRBNY, and may be revised after initial publication.

1. There is also the effective federal funds rate, which varies daily based upon trades in the federal funds overnight market. Trading statistics are reported each morning by the Federal Reserve Bank of New York (FRBNY):

• IRFEDD.US - federal funds effective rate (a volume-weighted average of trades)
• IRFEDLD.US - trading low
• IRFEDHD.US - trading high
• IRFEDSD.US - standard deviation of trades (in basis points)

2. The daily H.15 "Selected Interest Rates" statistical release by FRB.

Standard Data Buffet policy is to store rates as literal percentages. E.g. "0.25 percent" (or 25 basis points) is stored as "0.25. Conversely, Microsoft Excel would express this as 0.0025 with a numeric cell format that renders it as "0.25%."

In December 2008, the FOMC broke with tradition and set a range for the key rate (0.0-0.25%), instead of a single value. Data Buffet stores the midpoint of this range (0.125%) in JRFEDD.US.

For more on the organization and operations of the Federal Reserve Open Market Committee and monetary policy, please see its official page at ( http://federalreserve.gov/monetarypolicy/default.htm ).