The money market fund rate is the rate at which short terms loans and advances are taken from the market at the rate of interest prevailing in the market.

The money market fund rate is the rate at which the loan is taken from the market. People taken huge amount of loans from the market for a very short period of time and for which they are liable to pay some interest. The rate of interest paid by the borrower is decided by the amount of money the person has taken and the time period for which the money was taken.

Depending on the above two factor and on the forces of demand and supply the rate of interest is decided by the baking agency of every particular country. Funds are collected from the donors who give their money to be taken on interest and should be returned at the maturity of the contract set between both the parties. The lender electronically transfers the money into the borrowers account on the rate decided by both parties which will be paid back after a specified time period. There are many institutions and government bodies who take funds from the money market in times of need.

As mentioned earlier that the rate of interest depends on the amount of loan taken and on the time period but deciding the rate of interest prevailing in the money market is completely in the hands of the government of that country. The money market fund rate is in the hands of the government because by deciding the rate they control the flow cash in the market and if this control is not done the economy will either suffer from inflation or deflation. The government of every country has kept this power of controlling the fund rate in the market because this helps them to maintain stability in the market and reduces unequal distribution of wealth.

The money market fund rate fluctuates throughout the year with regular ups and downs.

The fund rate prevailing in the money market, forces the investors who invest in shares and securities of companies to have some control over their purchase and sale of investment. The money market fund rate is as important as it controls the entire purchase and sale of the economy and thus controlling the economy. Money is the thing which relates everything in the market i.e. the products sold in the market, the services provided in the market, the things sold in the stock market. So just by a minute fluctuation in the rate of the money market fund flow things are controlled by the government.

When there is lot of flow of cash in the market then the government increases the rate of interest of loans and other things which reduces the flow of cash. But if the flow of money in the market has decreased then the government decreases the rate of interest in the market which ultimately forces the people to purchases things sold in the market as the price of the commodities also decrease which increases the flow of cash.

The money market fund rate is the min controller of the price of the commodities, the flow of cash in the market, the services provided in the market, the fluctuations in the listings of the stock of that country. Thus the money market fund rate is a very vital tool in the hands of the government whose minute fluctuation changes the entire money flow in the economy.