US fed funds rate fall to 2.50 pct, 50 bps over Fed target

NEW YORK, Sept 30 (Reuters) - The key lending rate between U.S. banks fell close to the Federal Reserve's target Tuesday morning, after the Federal Reserve and European Central Bank injected dollar funds into the money markets in a bid to free credits for companies and consumers.

The interest rate on federal funds, or surplus reserves that banks lend to each other overnight, last traded at 2.50 percent, only 50 basis points above the Fed's current target rate.

The fed funds rate opened at 7 percent on Tuesday. (Reporting by Richard Leong; Editing by Theodore d'Afflisio)