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:
“I have travelled a good deal in Concord; and everywhere, in shops, and offices, and fields, the inhabitants have appeared to me to be doing penance in a thousand remarkable ways.... The twelve labors of Hercules were trifling in comparison with those which my neighbors have undertaken; for they were only twelve, and had an end; but I could never see that these men slew or captured any monster or finished any labor.”
—Henry David Thoreau (1817–1862)
“In comparison to the French Revolution, the American Revolution has come to seem a parochial and rather dull event. This, despite the fact that the American Revolution was successful—realizing the purposes of the revolutionaries and establishing a durable political regime—while the French Revolution was a resounding failure, devouring its own children and leading to an imperial despotism, followed by an eventual restoration of the monarchy.”
—Irving Kristol (b. 1920)