Definition
The price of borrowing money, or the reward for lending it, shown as a percentage per year.
The story
Borrow $1,000 at 6% and you owe $60 a year in interest. Put $1,000 in a savings account paying 4% and the bank pays you $40. Almost every rate in the economy, from mortgages to credit cards to Treasury yields, takes its cue in part from the Fed's target rate.
Why markets watch it
Rates set how expensive it is to borrow, which feeds into spending, company profits and stock prices.
See it in the story
Connects to
Federal funds rateCompound interestTreasury yieldReal interest rateCredit card interestMortgage ratesHigh-yield savings
Last seen in
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms