The Fed Funds Rate is the most important interest rate that you should be watching because it is tied to the monetary and financial conditions set by the Federal Reserve Bank. That is the grand poobah of banks which sets the Fed Funds rate, which is the rate at which banks can borrow money. You see, banks take in money, and pay out a lot of money each day. Sometimes they don’t have enough money to cover the reserve amount they need to keep, so they must borrow money. That borrowing of money costs money.
In simplicity, the higher the Fed Funds rate – the more expensive it is for you to borrow money. Conversely, the cheaper the rate is, the cheaper it is for you to borrow money.
There are tons of articles on the Fed Funds rate, so pick a few and read some more. Learning about this rate is really important because so many financial decisions you make – interest rate on buying a car, interest rate on buying a house, the amount of interest you are getting in your savings accounts, etc. depends on this rate.