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Aug 17, 2007

This chart means what?

Fedfunds

Both Felix Salmon and Brad DeLong seem to think that this chart is significant but offer no explanation at all. Can anyone help?

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The Fed has scheduled meetings where they decide what the target overnight rate should be. The can manipulate this rate by controlling how much money is put into the economy. The relevance of this chart is that, the effective rate has dropped even though they haven't announced a rate change at a Federal Reserve board meeting.

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