Target range
The band, usually 25 basis points wide, within which the Fed aims to keep the federal funds rate after each decision.
The target range is the band of interest rates within which the Federal Reserve aims to keep the federal funds rate. The committee sets its width, which in recent years has usually been 25 basis points, for example 4.25 to 4.50 percent. A decision is typically stated as a change to both ends of the range.
On our site, the current range is shown on the policy page and in the rate calendar. Check whether a source quotes the range, its midpoint or the effective rate before comparing figures.
Traders care because the range is the official policy stance, and moves are quoted in basis points against it. Rate futures settle against an average of the effective rate, not against the range itself.
Worked example (illustrative numbers, not real data): the range is 4.25 to 4.50 percent, with a midpoint of 4.375 percent. A 50-basis-point cut moves the range to 3.75 to 4.00 percent and the midpoint to 3.875 percent.