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:
“Certainly there is not the fight recorded in Concord history, at least, if in the history of America, that will bear a moment’s comparison with this, whether for the numbers engaged in it, or for the patriotism and heroism displayed.”
—Henry David Thoreau (1817–1862)
“When we reflect on our past sentiments and affections, our thought is a faithful mirror, and copies its objects truly; but the colours which it employs are faint and dull, in comparison of those in which our original perceptions were clothed.”
—David Hume (1711–1776)