Effective Fed Funds Rate Highest in 13 Months

The U.S. Federal Reserve’s benchmark rate for overnight loans between banks, the Fed funds effective rate , settled at 11 basis points on Tuesday, its highest level since Oct. 16, 2013.

The rate was up 1 basis point from 10 on Monday. On Friday it had settled at 9 basis points, which has been its average for the past year.

The increase comes as the Fed has been raising the rate it offers on the fixed-rate overnight reverse repurchase, or RRP, facility it has been testing for more than a year. This week it lifted the rate to 7 basis points from 3 basis points in the previous two weeks. Beginning Dec. 1, it will lift the RRP facility rate to 10 basis points.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza