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The Federal Funds Rate is the interest rate at which banks lend reserve balances to each other overnight, and it serves as the primary tool the Federal Reserve uses to conduct monetary policy. By adjusting this rate, the Fed influences overall borrowing costs in the economy, including interest rates on mortgages, credit cards, and business loans. 

When the Fed lowers the rate, it encourages borrowing and spending, which can boost economic growth and job creation. Conversely, when the Fed raises the rate, it makes borrowing more expensive, which helps slow down inflation. 

In this way, the Federal Funds Rate acts as the “base price” of money, playing a key role in balancing inflation, employment, and economic stability.