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Home Categories Monetary Policy Euribor is the interbank overnight rate, which consists of the average interest rates of a number of major European banks, which are used to lend to each other in euros. Expansionary policies are aimed at stimulating the economy by increasing demand through monetary and fiscal stimulus. Expectancy theory predicts future short-term interest rates based on current long-term interest rates. The federal discount rate is the interest rate that the Federal Reserve System (FRS) charges banks for borrowing money from the Federal Reserve Bank. Federal funds refer to excess reserves held by financial institutions in excess of the central bank’s mandatory reserve requirements. The federal funds rate is the target interest rate set by the FOMC. The Federal Open Market Committee is a division of the Federal Reserve System. The Federal Open Market Committee is a division of the Federal Reserve System. The Federal Reserve Act of 1913 created the Federal Reserve System, known simply as the “Fed”. The Federal Reserve System is the central bank and monetary authority of the United States.