Definition ∞ Federal Reserve rates are the interest rates set by the United States central bank, the Federal Reserve. These rates, primarily the federal funds rate, influence borrowing costs across the entire economy, impacting everything from consumer loans to corporate debt. Changes in these rates are a key monetary policy tool used to manage inflation and economic growth.
Context ∞ Federal Reserve rates exert substantial influence on global financial markets, including the digital asset sector. Decisions regarding rate adjustments are closely watched by investors for their potential impact on liquidity and risk appetite. A critical future development involves assessing how digital currencies and decentralized finance protocols might alter the transmission mechanisms of traditional monetary policy, potentially creating new challenges for central banks.
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