Comparison With LIBOR
Though the London Interbank Offered Rate (LIBOR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows:
- The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
- The (effective) federal funds rate is achieved through open market operations at the Domestic Trading Desk at the Federal Reserve Bank of New York which deals primarily in domestic securities (U.S. Treasury and federal agencies' securities).
- LIBOR is calculated from prevailing interest rates between highly credit-worthy institutions.
- LIBOR may or may not be used to derive business terms. It is not fixed beforehand and is not meant to have macroeconomic ramifications.
Read more about this topic: Federal Funds Rate
Famous quotes containing the words comparison with and/or comparison:
“What is man in nature? A nothing in comparison with the infinite, an all in comparison with the nothinga mean between nothing and everything.”
—Blaise Pascal (16231662)
“What is man in nature? A nothing in comparison with the infinite, an all in comparison with the nothinga mean between nothing and everything.”
—Blaise Pascal (16231662)
Related Phrases
Related Words