By TheStreet Staff What Is the Federal Funds Rate?The fed funds rate is the rate of interest that banks use to lend money to each other. This rate is controlled by the Federal Reserve and can be adjusted through changing market conditions. For instance, the Fed may raise or lower the fed funds rate as a way to encourage lending, curb inflation, or to generally maintain a strong economy. Banks are required to keep a percentage of their deposits on hand as reserves. These reserves are also known as federal funds. Since banks are also profit-seeking businesses, they often lend some of their feder…