Leitzins / funds rate:
|Country:||Current / Aktueller Wert||Since / Seit|
|USA||2,0 – 2,25%||26.09.2018|
|Japan||0 bis -0,1%||01.02.2016|
|Schweiz||-1,25 bis -0,25 %||15.01.2015|
the central bank interest rate / federal funds rate – is the “cost of money” – meaning how much does it cost to borrow 100USD of CASH from the FED as a private bank.
Only the FED as the ECB is allowed to print and lend CASH.
Fun Fact: Private banks actually can lend 1000USD – when they actually only have 100USD from the FED – 900USD (90%) is created out of thin digital air and only exists in digital form.
Thus: If people would request only 20% of all funds of a bank to be paid out in cash – the bank could not do it.
“The Federal Reserve will conclude its final policy meeting of the year Wednesday.
With traders widely expecting the central bank to raise short-term interest rates, many say the focus will be on Fed officials’ comments on the economy.
Volatile markets and mixed inflation data have amplified investors’ doubts about how many times the Fed can raise rates next year.” (src)
The 2008 recession caused the Fed to lower its benchmark rate to 0.25 percent. That’s effectively zero. It stayed there seven years until December 2015, when the Fed raised interest rates to 0.5 percent. The fed funds rate controls short-term interest rates. These include banks’ prime rate, most adjustable-rate and interest-only loans, and credit card rates.
“If the rate is raised, expect slower growth. It will also raise the cost of home mortgages, loans, and credit cards.” (src)
The FOMC raised the fed funds rate a quarter point to 2.25 percent on September 26, 2018.
Prior to that, the Fed had raised rates to the following levels:
- 0.5 percent on Dec. 15, 2015.
- 0.75 percent on Dec. 14, 2016.
- 1.0 percent on March 5, 2017.
- 1.25 percent on June 14, 2017.
- 1.5 percent on Dec. 13, 2017.
- 1.75 percent on March 21, 2018.
- 2.0 percent on June 13, 2018.
The Fed finished tapering off its quantitative easing (printing money) program in 2013.
That was a massive expansion of the Fed’s open market operations tool.
The Fed still had $4 trillion of debt in 2017 on its books from QE.
In October 2017, it began allowing its holdings to gradually decline.
“The FOMC sets a target for the fed funds rate at its regular meeting. Banks charge each other this rate when they lend each other funds. Those are loans banks make to each other to meet the Fed’s reserve requirement. Technically, the banks set these rates, not the Federal Reserve. But banks usually follow whatever rate the Fed sets as its target. ”
If you a Tripple-AAA rated US-company would need to borrow money – you would have to pay 5% interest according to: https://www.bankrate.com/rates/interest-rates/wall-street-prime-rate.aspx