Effective Federal Funds Rate

In this graph, we see the Fed Funds Rate from the late 1950s to 2015. In times of recession, banks lower their Fed Funds rate (hence the dips in the line in the grey areas) in order to persuade more people to take out money from a bank (which would stimulate the economy and *hopefully* bring it out of recession). Then, the banks that borrow the money from the Federal Reserve are able to lower their own rates for their loans. Members of those banks can then get mortgages, take out credit cards, etc. for a lower rate.

As soon as recessions are over, banks feel free to raise the Fed Funds rate again because the economy no longer needs that boost from bank members being attracted to take out more loans (with the lower rates).