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What is the Federal funds rate and how does it affect the economy? The Federal Reserve...

What is the Federal funds rate and how does it affect the economy? The Federal Reserve (FED) increased both the Federal funds rate and their interest rate expectations during their March meeting. Why? How did the market react to the news? What effect, if any, did the TCJA have on the FED’s growth and inflation expectations?

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Federal fund rate is the rate at which depository institutions such as banks and credit unions lend reserve balances to other depository unions overnight without collateral. It is important since it decides the rate of short term interest rates.
This shall lead to increase in rates on lending from nearly everyone, banks to crredit card rates. However since the GDP expectations have been better and market expected the hike, therefore there was no loss on the share price market on the day as the mrakets were stable. however the next day the markets were in red in small extent.

TCJA is expected to add up 0.2% on the GDP as the tax cuts shall provide more earnings to people.

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