Since they meet periodically to consider changing it, and since it is the rate of interest for banks to borrow some float for their operations, I think you could call it a short-term rate, although sometimes the rate stays unchanged for a pretty good period of time, historically. Higher or lower rates charged by the Federal Reserve affect the velocity of money in our economy (not all economies have or need such a sophisticated tool). Low rates TEND to help money move a tad bit faster and higher rates TEND to help money slow down some. This isn't so much an oar in the water as a rudder on the boat. In some ways it sounds about as important as jumping in an elevator to help it along, but with the size and speed of our economy, plus the example it sets, it leads the economy by raising or lowering interest rates banks charge their customers. Think of it as a dance, both partners WANT to follow together in step if they want to appear graceful together. In this dance the Federal Reserve leads, banks then become the girl that follows.