Fed Rates

Definition ∞ Fed rates, or Federal Reserve rates, refer to the target interest rates set by the U.S. central bank to influence the cost of borrowing money throughout the economy. These rates, primarily the federal funds rate, serve as a key monetary policy tool affecting inflation, economic growth, and asset valuations. Changes in Fed rates have significant ripple effects across global financial markets, including traditional assets and increasingly, digital assets. Policymakers adjust these rates based on macroeconomic conditions and their outlook for the economy.
Context ∞ Discussions around Fed rates are a constant in financial news, as they directly impact borrowing costs, investment decisions, and overall market liquidity. In the context of cryptocurrency, changes in Fed rates are closely watched for their potential influence on investor appetite for riskier assets like digital currencies. Analysts frequently assess how anticipated rate hikes or cuts might affect Bitcoin’s price, DeFi yields, and the broader digital asset landscape.