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

Harris County Commissioners Court on Wednesday approved the county's plan to spend $1.1 billion in the first round of post-Hurricane Harvey federal funds. Zach Despart, Houston Chronicle, "Harris County Commissioners Court OKs plan to spend $1.1B in post-Harvey federal funds," 11 July 2018 The program taxes hospitals and adds matching federal funds before redistributing the money to about 200 hospitals across the state. Robert Channick, chicagotribune.com, "South Shore Hospital tells state it needs $3 million in funding by Aug. 1 to avoid shutdown," 10 July 2018 The next phase has yet do be funded — the most recent application for federal funds did not make the cut. Emily Hopkins, Indianapolis Star, "In Hendricks County, Ronald Reagan Parkway extension pits science against growth," 9 July 2018 The new airport, built partly with federal funds, started out with three hangars and three runways on 1,200 acres, handling six flights a day. Paula Allen, San Antonio Express-News, "Experts weigh in on reader's midcentury San Antonio airport photo," 7 July 2018 As revealed by Jake Fischer and Jon Wertheim in a recent SI exclusive, the government’s case against Dawkins has been undermined by revelations that the lead FBI agent who arguably set up Dawkins misused federal funds during the probe. Michael Mccann, SI.com, "Why Maryland Receiving FBI Subpoenas Should Worry Other College Programs, Basketball Players," 7 July 2018 Chicago's Department of Transportation started rolling out Divvy in the summer of 2013 during the equally bike-friendly Rahm Emanuel administration at a cost of nearly $28 million—mostly covered by federal funds. Ryan Smith, Chicago Reader, "Divvy at 5: Chicago’s bike share is better than ever," 18 June 2018 District officials also anticipate using two types of federal funds, additional grants, and money from the 2018 teaching and learning department budget, district spokesman Tom Jackson said in an email. Staff Report, Aurora Beacon-News, "East Aurora receives $675,000 grant to partially cover shift to STEM, STEAM," 2 July 2018 Trump in February announced a $1.5 trillion infrastructure plan that would use $200 billion in federal funds to leverage state, local and private-sector investment. Washington Post, "Trump’s own tariffs make it harder to rebuild infrastructure," 30 June 2018

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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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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