™A 3.75%–4.00% target range is a policy objective. An EFFR of 3.88% is the volume-weighted median rate calculated from eligible federal-funds transactions for that business day.
Bonds & Rates
Federal funds rate
The market rate on overnight unsecured federal-funds transactions between eligible institutions. The FOMC sets a target range; the New York Fed separately publishes the effective federal funds rate calculated from reported transactions.
Plain-English context
Why it matters
This term can refer loosely to a policy setting, but the target range and the observed effective rate are different. The FOMC sets the target; the New York Fed calculates and publishes the EFFR from reported overnight transactions.
Keep the policy target range distinct from the transaction-based effective rate and from consumer borrowing rates.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. New York Fed — Effective federal funds rate