What Is the Federal Funds Rate?

Understanding the federal funds rate helps explain why interest rates rise and fall across the economy.To have a complete understanding of what the federal funds rate is, you first have to understand the basics of how the Federal Reserve works. Dreamstime/TCA1/14/2026|Updated: 1/14/2026By Jeff Reeves From Kiplinger’s Personal FinanceIf you’ve been paying attention to chatter about interest rates in recent years, you’ve probably come across the term “federal funds rate”—or just “fed funds rate” for short. But what exactly is the federal funds rate, and why does it matter?Tribune News ServiceAuthorAuthor’s Selected Articles