The FRED Blog has discussed how the daily operations of the Federal Reserve Banks and, specifically, the New York Fed generally maintain the effective federal funds rate within the target range set by the Federal Open Market Committee (FOMC).

As part of this management effort, the New York Fed monitors a variety of overnight interest rates that help take the pulse of financial markets and the overall cost of borrowing. Data added to FRED last October allow us to see how recent changes to the Federal Reserve System’s balance sheet have impacted money market conditions.

The FRED graph above shows two different categories of rates:

• Interest rates set by financial markets:
  • Solid red line: The effective federal funds rate (EEFR), which is set by financial institutions who charge one another for unsecured overnight loans in what is known as the federal funds market.
  • Dashed blue line: The tri-party general collateral rate (TGCR), which is set by financial institutions that borrow and lend from one another, through a third party, offering Treasury securities as collateral for overnight repayment.
• Interest rate target range set by the FOMC. The dotted orange lines show the targeted upper and lower limits of rates for trading in the federal funds market, described above.

Over the past year, the EEFR has steadily remained within its targeted limits, while the TGCR has fluctuated above and below the EEFR, sometimes even exceeding the EEFR’s upper target limit.

The gradual reduction in the amount of Treasury securities held in the Federal Reserve System’s balance sheet, combined with the Treasury’s management of its own holdings at the Fed, can help explain the volatility of the TGCR. The draining of Treasury securities from financial markets has made them dearer to institutions relying on them to borrow and lend overnight, in turn making interest rates more responsive to small day-to-day changes in their availability.

For more information about daily financial markets and monetary policy implementation, see these November 12, 2025, remarks by the Manager of the Federal Reserve System Open Market Account and this Implementation Note issued by the FOMC on December 10, 2025.

How this graph was created: Search FRED for and select “Federal Funds Target Range – Upper Limit.” Click on the “Edit Graph” button and select the “Add Line” tab to search for “Tri-Party General Collateral Rate.” Don’t forget to click on “Add data series.” Repeat the last two steps to search for and add the other two series: “Federal Funds Effective Rate” and “Federal Funds Target Range – Lower Limit.”

Suggested by Diego Mendez-Carbajo.