federal funds

plural noun

Definition of federal funds

: reserve funds lent overnight by one Federal Reserve bank to another

Examples of federal funds in a Sentence

Recent Examples on the Web The efforts could lead to an undercount of the number of immigrants, and thus affect California’s representation in Congress and its share of federal funds. Tim Arango, New York Times, "Trump Inspires California Lawmakers to Go on Offense," 14 Sep. 2019 Title 1 schools are those receiving federal funds for Title 1 students. Roy Kent, Houston Chronicle, "RBC Capital Markets, Spring Branch Education Foundation provide school supplies to SBISD’s Title 1 elementary and middle schools," 13 Sep. 2019 There were now two sets of poverty numbers, because the earlier version was still used to allocate federal funds to states. Robert Samuelson, Twin Cities, "Robert Samuelson: Will the real poverty rate please stand up?," 12 Sep. 2019 Supervisors also supported a proposal to replace $463,265 in federal funds for six Planned Parenthood clinics. Thy Vo, The Mercury News, "Santa Clara County sends more money to rape crisis centers, Planned Parenthood," 10 Sep. 2019 Bennet’s climate plan calls for investing $1 trillion of federal funds over 10 years. Joe Garofoli, SFChronicle.com, "If Joe Biden’s campaign implodes, Michael Bennet is ready," 10 Sep. 2019 The Billings Gazette reports federal funds would cover 75% of the purchase cost. USA TODAY, "Animation behind bars, Elliott the elk, SkyStar: News from around our 50 states," 10 Sep. 2019 Harris requires police data reporting as a condition of federal funds, an acknowledgment to the poor data collection of use of force by police departments across the country. Cnn.com Wire Service, The Mercury News, "Kamala Harris draws upon background in unveiling criminal justice plan," 9 Sep. 2019 Then in 1939, with the help of federal funds, the city was able to open a park just for Vulcan atop Red Mountain. John Archibald | Jarchibald@al.com, al, "Are you a true Birmingham local? Answer these 15 questions," 9 Sep. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'federal funds.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of federal funds

1924, in the meaning defined above

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Statistics for federal funds

Last Updated

31 Oct 2019

Time Traveler for federal funds

The first known use of federal funds was in 1924

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More Definitions for federal funds

federal funds

plural noun

Financial Definition of federal funds

What It Is

Federal funds are monies held by banks at the Federal Reserve to meet reserve requirements. Funds in excess of reserve requirements can be loaned to other banks in order for those banks to meet reserve requirements.

How It Works

Federal funds loans are unsecured and are for very short periods, typically overnight. They are usually made through brokers who specialize in such transactions, or they are arranged directly between the banks themselves. The interest rate on a federal funds loan is called the federal funds fate.

Why It Matters

Changes in the federal funds fate compel banks to either borrow federal funds to meet reserves requirements or build them up internally. These decisions affect how much money is available for lending to bank customers. The resulting increase or decrease in the supply of money available for lending usually affects overall interest rates, and factors into economic stability -- the ultimate objective of the Fed.

Although the Federal Reserve cannot directly control Federal Funds activity, it can manipulate it. The Fed does this primarily by offering competing loans to banks. Manipulation of the Federal Funds Rate is one of three primary methods the Federal Reserve uses to control the money supply. (The other two involve changing reserve requirements and buying or selling U.S. Treasuries on the open market.)

Source: Investing Answers

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