what is the difference between the federal funds and regular interest rates 
both the federal funds rate and interest rates are some of the most important financial indicators in the u s the chief distinction is that the federal funds rate sets the range that banks will lend or borrow to each other overnight because this impacts borrowing costs and financial conditions stock markets are typically sensitive to changes in these rates the federal funds rate also indirectly affects short term interest rates conversely interest rates which are set by the federal reserve determine the rate that it costs for banks to borrow the bottom linethe federal funds rate is used by the fed to control monetary policy and is watched closely by investors to gauge how the market may move in the future the rate is one of the most important pieces of financial data in the u s 