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)
“The difference between human vision and the image perceived by the faceted eye of an insect may be compared with the difference between a half-tone block made with the very finest screen and the corresponding picture as represented by the very coarse screening used in common newspaper pictorial reproduction. The same comparison holds good between the way Gogol saw things and the way average readers and average writers see things.”
—Vladimir Nabokov (1899–1977)