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

In recent years, there have been signs of hope as politicians, business leaders and residents have come together to advocate for state and federal funds to aid these restoration efforts. Gena Somra, CNN, "Louisiana's shrinking marshes signal the loss of a way of life," 6 June 2018 Officials also have pointed out that the city cannot use a local preference on projects involving state or federal funds, which includes most of the city’s larger road and bridge projects. Steve Lord, Aurora Beacon-News, "Aurora taking time with local preference option for city contracts," 6 June 2018 The state schools chief runs the California Department of Education, which oversees standardized testing, the collection of student data and the use of state and federal funds. Joy Resmovits, latimes.com, "In race for California schools chief, candidates are buoyed by big money from charter supporters and unions," 31 May 2018 Windy Ridge Whitetails will be paid from a combination of state and federal funds, said Paul McGraw, a state veterinarian. Paul A. Smith, Milwaukee Journal Sentinel, "State agriculture officials depopulate another deer farm over CWD concerns," 26 May 2018 The plan, which must eventually be approved by Georgia’s Department of Community Affairs and the Atlanta Regional Commission, is also necessary for Gwinnett to qualify for certain state and federal funds. Tyler Estep, ajc, "You can still weigh in on Gwinnett’s future development plan," 11 May 2018 Medicaid operates with state and federal funds and the attorneys who filed the lawsuit argue Wisconsin's denial of services for Flack and Makenzie amounts to a violation of ACA's prohibition on discrimination based on gender identity. Ivan Moreno, chicagotribune.com, "Transgender residents sue over Wisconsin's Medicaid rule," 30 Apr. 2018 Former Arizona assistant coach Emanuel Richardson has reached an agreement with New York prosecutors to plead guilty to one count of federal funds bribery at a hearing later this month. John Marshall, The Seattle Times, "Arizona assistant agrees to plea deal on bribery charges," 7 Jan. 2019 The Federal Reserve hiked interest rates Wednesday, putting the federal funds rate between 1.75 percent and 2 percent. Sarah Hauer, Milwaukee Journal Sentinel, "What do Fed interest rate hikes mean for student loans?," 13 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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Last Updated

15 Feb 2019

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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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