The Federal Reserve has a decision to make next week. It must decide whether now is a good time to increase interest rates, the Fed funds rate in particular, which could help to staunch recent bleeding in bank stocks.
The Fed funds rate is the interest rate at which banks lend excess reserves stored at the central bank to each other. A higher rate, means they make more money doing so. Even more importantly, because the Fed funds rate is the key short-term interest rate benchmark in the United States, all other rates are likely to respond in kind, pushing up loan yields and thereby filling banks' coffers with extra net interest income.
The Fed funds rate is the interest rate at which banks lend excess reserves stored at the central bank to each other. A higher rate, means they make more money doing so. Even more importantly, because the Fed funds rate is the key short-term interest rate benchmark in the United States, all other rates are likely to respond in kind, pushing up loan yields and thereby filling banks' coffers with extra net interest income.