Federal funds rate
The interest rate banks charge each other for overnight loans of reserves.
The federal funds rate is not set by the Federal Reserve directly. It is a market rate: the price at which banks lend reserve balances to one another overnight, without collateral.
What the Federal Open Market Committee sets is a target range for that rate — currently expressed as a quarter-point band. The Federal Reserve Bank of New York then uses its policy tools to keep the effective rate trading inside the band. The distinction matters when reading coverage: the committee announces an intention, and the implementation happens separately.
The rate matters far beyond interbank lending because so many other rates are priced off it, directly or by expectation.
It is the rate the FOMC targets. Every headline that says the Fed 'raised rates' or 'cut rates' is describing a change to the target range for this one rate.