The rate most often cited for the fed funds market is known as the effective fed funds rate. The Federal Reserve Bulletin defines "the daily effective rate" as "a weighted average of rates on trades...

The rate most often cited for the fed funds market is known as the effective fed funds rate. The Federal Reserve Bulletin defines "the daily effective rate" as "a weighted average of rates on trades through N.Y. brokers." This weighting process, which takes the size of transactions into account, can be illustrated in an example.