View source for Federal funds rate

{{Short description|Interest rates to maintain banks' Federal Reserve balance in the U.S.}}
{{Use American English|date = March 2019}}
{{Use mdy dates|date = March 2019}}

[[File:FFR treasuries.webp|thumb|375px|right|
{{legend-line|#F5A623 solid 3px|[[Mortgage loan|30 year mortgage average]]}}
{{legend-line|#F8E71C solid 3px|[[treasury bond|30 Year Treasury Bond]]}}
{{legend-line|#000000 solid 3px| 10 Year Treasury Bond}}
{{legend-line|#9013FE solid 3px| 2 Year Treasury Bond}}
{{legend-line|#4A90E2 solid 3px| 3 month Treasury Bond}}
{{legend-line|#D0021B solid 4px| Effective Federal Funds Rate}}  
{{legend-line|#E786F9 solid 4px| [[United States Consumer Price Index|CPI inflation]] year/year}}
{{color box|lightgrey}} [[List of recessions in the United States|Recessions]]
]]
[[File:US Treasury interest rates.webp|thumb|300px|[[United States Treasury security|US Treasury]] interest rates compared to Federal Funds Rate. The Federal Funds Rate pushes up shorter term treasuries to cause an [[inverted yield curve]] when the [[Federal Reserve]] wants to tame [[demand]] and [[inflation]]. 
{{legend-line|black solid 3px|Federal Funds Rate}}
]]
[[File:Inflation compared to federal funds rate.jpg|right|thumb|Inflation (blue) compared to federal funds rate (red)]]
[[File:Federal funds rate vs unemployment rate.png|thumb|Federal funds rate vs unemployment rate]]

In the United States, the '''federal funds rate''' is the [[interest rate]] at which [[depository institution]]s (banks and credit unions) lend reserve balances to other depository institutions overnight on an [[collateral (finance)|uncollateralized]] basis. [[Bank reserves|Reserve balances]] are amounts held at the [[Federal Reserve]]. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets<ref>{{cite web |url=http://www.newyorkfed.org/aboutthefed/fedpoint/fed15.html |title=Fedpoints: Federal Funds |access-date=2 October 2011 |date=August 2007 |publisher=[[Federal Reserve Bank of New York]]}}</ref><ref>{{cite book|title=The Federal Reserve System: Purposes & Functions|publisher=Federal Reserve Board|location=Washington, D.C.|url=http://www.federalreserve.gov/pf/pdf/pf_3.pdf|access-date=2 October 2011|page=4|chapter=The Implementation of Monetary Policy|date=24 August 2011}}</ref> and central to the conduct of [[Monetary policy of the United States|monetary policy in the United States]] as it influences a wide range of [[market interest rate]]s.<ref name="Fed"/>

The '''effective federal funds rate''' ('''EFFR''') is calculated as the effective median interest rate of overnight federal funds transactions during the previous business day. It is published daily by the Federal Reserve Bank of New York.<ref>{{cite web |title=Effective Federal Funds Rate |website=[[Federal Reserve Bank of New York]] |url=https://www.newyorkfed.org/markets/reference-rates/effr|access-date=1 May 2021}}</ref>

The '''federal funds target range''' is determined by a meeting of the members of the [[Federal Open Market Committee]] (FOMC) which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.

The Federal Reserve adjusts its administratively set interest rates, mainly the interest on reserve balances (IORB), to bring the effective rate into the target range. Additional tools at the Fed's disposal are: the overnight reverse repurchase agreement facility, [[bank rate|discount rate]], and [[open market operations]]. The target range is chosen to influence market interest rates generally and in turn ultimately the level of activity, [[employment]] and [[inflation]] in the [[Economy of the United States|U.S. economy]].<ref name="Fed">{{cite web |title=The Fed Explained: What the Central Bank Does |url=https://www.federalreserve.gov/aboutthefed/files/the-fed-explained.pdf |website=www.federalreserve.gov |publisher=Federal Reserve System Publication |access-date=3 August 2023 |date=August 2021}}</ref>

==Mechanism==
Financial institutions are obligated by law to hold [[market liquidity|liquid]] assets that can be used to cover sustained net cash outflows.<ref>{{cite web|title=12 CFR 249.10: Liquidity coverage ratio|url=https://www.ecfr.gov/current/title-12/chapter-II/subchapter-A/part-249/subpart-B/section-249.10|access-date=2022-07-29}}</ref> Among these assets are the deposits that the institutions maintain, directly or indirectly, with a [[Federal Reserve Bank]].<ref>{{cite web|title=12 CFR 249.20: High-quality liquid asset criteria|url=https://www.ecfr.gov/current/title-12/chapter-II/subchapter-A/part-249/subpart-C/section-249.20|access-date=2022-07-29}}</ref> An institution that is below its desired level of liquidity can address this temporarily by borrowing from institutions that have Federal Reserve deposits in excess of their requirement. The interest rate that a borrowing bank pays to a lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the ''effective'' federal funds rate.

The Federal Open Market Committee regularly sets a target range for the federal funds rate according to its policy goals and the economic conditions of the United States. It directs the Federal Reserve Banks to influence the rate toward that range with adjustments to their own deposit interest rates.<ref>{{cite web |title=How Does the Fed Influence Interest Rates Using Its New Tools? |url=https://www.stlouisfed.org/open-vault/2020/august/how-does-fed-influence-interest-rates-using-new-tools |website=www.stlouisfed.org |access-date=4 August 2023 |language=en |date=August 5, 2020}}</ref> Although this is commonly referred to as "setting interest rates," the effect is not immediate and depends on the banks' response to money market conditions.

[[Future contract]]s in the federal funds rate trade on the [[Chicago Board of Trade]] (CBOT), and the financial press refer to these contracts when estimating the probabilities of upcoming FOMC actions.

===How the Fed attains its target rates===
'''Interest on Reserve Balances (IORB)''' is the primary tool for achieving the target federal funds rate. It is an interest rate the Fed pays to banks for holding their funds at the Federal Reserve Bank. Because this offers a risk-free way to earn interest on their funds, banks do not tend to lend to each other at rates below the IORB, effectively setting a floor for the federal funds rate.<ref name = tools>{{cite web | title=How the Fed Implements Monetary Policy with Its Tools | publisher=St. Louis fed | url=https://www.stlouisfed.org/in-plain-english/the-fed-implements-monetary-policy#:~:text=Because%20the%20interest%20on%20reserve,adjust%20the%20federal%20funds%20rate.}}</ref>

'''Overnight Reverse Repurchase Agreement Facility''' is how the Fed sets rates for financial institutions which do not qualify to earn the IORB. It does this by allowing them to earn an interest on their funds via [[Repurchase agreement#Reverse repo facility|reverse repurchase agreements]] with the Fed. This helps further ensure a floor to the federal funds rate.<ref name = tools/>

'''[[Bank rate|Discount rate]]''' is the interest rate at which the Fed loans out its funds to eligible institutions via the [[discount window]]. This makes it unlikely for banks or other institutions to make loans at higher rates, therefore effectively setting a ceiling to the federal funds rate.<ref name = tools/>

'''[[Open Market Operations]]''' is when the Federal Reserve buys or sells government securities, thereby either adding or removing liquidity from the banking system. Without sufficient liquidity in the system, the other tools Fed uses become ineffective.<ref name = tools/>

==Applications==
[[interbank lending market#A source of funds for banks|Interbank borrowing]] is essentially a way for banks to quickly raise money. For example, a bank may want to finance a major industrial effort but may not have the time to wait for deposits or interest (on loan payments) to come in. In such cases the bank will quickly raise this amount from other banks at an interest rate equal to or higher than the Federal funds rate.

Raising the federal funds rate will dissuade banks from taking out such inter-bank loans, which in turn will make cash that much harder to procure. Conversely, dropping the interest rates will encourage banks to borrow money and therefore invest more freely.<ref>{{cite web|url=http://www.bankrate.com/rates/interest-rates/federal-funds-rate.aspx|title=Fed funds rate|publisher=Bankrate, Inc|date=March 2016}}</ref> This interest rate is used as a regulatory tool to control how freely the U.S. economy operates.

By setting a higher discount rate the Federal Reserve discourages banks from requisitioning funds from Federal Reserve Banks, yet positions itself as a [[lender of last resort]].

==Comparison with LIBOR==
Though the [[London Interbank Offered Rate]] (LIBOR), the [[SOFR|Secured Overnight Financing Rate]] (SOFR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows:
* The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
* The (effective) federal funds rate is achieved through open market operations at the Domestic Trading Desk at the Federal Reserve Bank of New York which deals primarily in domestic securities (U.S. Treasury and federal agencies' securities).<ref>{{cite journal|url=http://www.federalreserve.gov/pubs/bulletin/1997/199711lead.pdf|title=Open Market Operations in the 1990s|type=PDF|author=Cheryl L. Edwards|others=Gerard Sinzdak|date=November 1997|journal=Federal Reserve Bulletin}}</ref>
* LIBOR is based on a questionnaire where a selection of banks guess the rates at which they could borrow money from other banks.
* LIBOR may or may not be used to derive business terms. It is not fixed beforehand and is not meant to have macroeconomic ramifications.<ref>{{cite web|url=http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=225&a=1416|archive-url=https://web.archive.org/web/20070216192841/http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=225&a=1416|archive-date=2007-02-16|title=BBA LIBOR - Frequently asked questions|publisher=British Bankers' Association|date=March 21, 2006}}</ref>

==Predictions by the market==
[[File:Federal Funds Rate vs 1 Month Treasury Bill.webp|thumb|Federal Funds Rate vs 1 Month [[Treasury Bill]]]]
Considering the wide impact a change in the federal funds rate can have on the value of the dollar and the amount of lending going to new economic activity, the Federal Reserve is closely watched by the market. The prices of Option contracts on fed funds futures (traded on the [[Chicago Board of Trade]]) can be used to infer the market's expectations of future Fed policy changes. Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market's views on the likelihood of changes in U.S. monetary policy, the [http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html CME Group FedWatch tool] allows market participants to view the probability of an upcoming Fed Rate hike. One set of such ''implied probabilities'' is published by the Cleveland Fed.<!--

This seems like advertising and/or ego-puffery - anyone know if Lucas and Quek are really the pioneers this claims?

As such, the prices of the CBOT Fed Funds contract reflect expectations of Fed actions and can be used to calculate the implied probability of action at each FOMC meeting.  This phenomenon was perceived by Gerald Lucas and Timothy Quek, [[fixed-income]] strategists at [[Merrill Lynch]] who published the article "Front-End Pricing Report Guide" in the Merrill Lynch Global Fixed Income Research report of Nov. 10, 1995. They created a financial model to calculate the probabilities at FOMC meetings and published their Fed Funds Probability reports for their clients. Ever since, the financial markets have tracked this probability, which is frequently reported by financial media such as [[CNBC]] and [[MarketWatch]].-->

==Historical rates==
{{See also|History of Federal Open Market Committee actions}}
[[File:Interest rates.webp|thumb|350px|Prime Rate floats about 3% above the Federal funds rate
{{legend-line|#80699B dotted 3px|[[Credit card interest]] rates}}
{{legend-line|#4572A7 dotted 3px|[[Auto loan]] interest rate 48 months new autos}}
{{legend-line|#3D96AE solid 3px|[[Prime rate|Prime Rate]] }}
{{legend-line|#BD10E0 solid 3px|[[Government bond|10 year Treasury bond]]}}
{{legend-line|#AA4643 solid 3px|[[United States Consumer Price Index]]}}
{{legend-line|#89A54E solid 3px|Federal funds rate }}
]]
The last full cycle of rate increases occurred between June 2004 and June 2006 as rates steadily rose from 1.00% to 5.25%. The target rate remained at 5.25% for over a year, until the Federal Reserve began lowering rates in September 2007. The last cycle of easing monetary policy through the rate was conducted from September 2007 to December 2008 as the target rate fell from 5.25% to a range of 0.00–0.25%. Between December 2008 and December 2015 the target rate remained at 0.00–0.25%, the lowest rate in the Federal Reserve's history, as a reaction to the [[2008 financial crisis]] and the [[Great Recession]]. According to Jack A. Ablin, chief investment officer at Harris Private Bank, one reason for this unprecedented move of having a range, rather than a specific rate, was because a rate of 0% could have had problematic implications for money market funds, whose fees could then outpace yields.<ref>{{cite web|url=http://meridianstar.com/national/x681144788/4-56-p-m-US-Closing-Stocks |title=4:56 p.m. US-Closing Stocks |publisher=Associated Press |date=December 16, 2008 |url-status=dead |archive-url=https://archive.today/20120718205758/http://meridianstar.com/national/x681144788/4-56-p-m-US-Closing-Stocks |archive-date=July 18, 2012 }}</ref> In October 2019 the target range for the Federal Funds Rate was 1.50–1.75%.<ref name=":1">{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20190918a.htm|title=Federal Reserve issues FOMC statement |date= September 18, 2019 |publisher=Board of Governors of The Federal Reserve System}}</ref> On March 15, 2020, the target range for Federal Funds Rate was 0.00–0.25%,<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm |title=Federal reserve press release}}</ref> a full percentage point drop less than two weeks after being lowered to 1.00–1.25%.<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20200303a.htm|title=Federal reserve press release}}</ref>

In light of the [[2021–2022 inflation surge|2021–2022 global inflation surge]], the Federal Reserve has raised the FFR aggressively. In the latter half of 2022, the FOMC had hiked the FFR by 0.75 percentage points on 4 different consecutive occasions, and in its final meeting of 2022, hiked the FFR a further 0.5 percentage points. The FFR sat around 4.4% in 2022, and at the time the Fed foreshadowed that the rate would not be lowered until 2024 at the earliest.<ref>{{Cite web |last=Cox |first=Jeff |title=Fed raises interest rates half a point to highest level in 15 years |url=https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html |access-date=2022-12-15 |website=CNBC |language=en}}</ref><ref>{{Cite web |title=Federal Reserve boosts interest rates — again. Here's what it means for your wallet. |url=https://www.cbsnews.com/news/federal-reserve-rate-hike-financial-impact-december-2022/ |access-date=2022-12-15 |website=www.cbsnews.com |language=en-US}}</ref>

In Sept. 2024, the Fed lowered its benchmark rate for the first time since 2020 by 50 basis points.<ref>{{Cite web |title=Yun: Fed Rate Cut May Have Little Impact on Mortgages |url=https://www.nar.realtor/magazine/real-estate-news/yun-fed-rate-cut-may-have-little-impact-on-mortgages |access-date=2024-09-18 |website=www.nar.realtor |language=en}}</ref>

[[File:Federal funds rate history and recessions.png|800px|center]]

The central bank of the United States has reduced the Federal Reserve interest rate by 0.25%, marking the second reduction in 2025. The leader of the US central bank viewed this as a sign of increasing inflation and unemployment within the nation, and deemed this measure as a means to stimulate economic activity.<ref>{{cite web |title=Fed cuts interest rates for second time this year amid economic uncertainty |url=https://www.theguardian.com/business/2025/oct/29/federal-reserve-interest-rates |website=The Guardian}}</ref><ref>{{cite web |title=federal reserve interest rate |url=https://edition.cnn.com/business/live-news/federal-reserve-interest-rate-10-29-25 |website=CNN}}</ref>

==Explanation of federal funds rate decisions==
When the FOMC wishes to reduce interest rates they will increase the supply of money by buying [[United States Treasury security|government securities]]. When additional supply is added and everything else remains constant, the price of borrowed funds – the federal funds rate – falls. Conversely, when the Committee wishes to increase the federal funds rate, they will instruct the Desk Manager to sell government securities, thereby taking the money they earn on the proceeds of those sales out of circulation and reducing the [[money supply]]. When supply is taken away and everything else remains constant, the interest rate will normally rise.<ref>{{cite web|title=An Explanation of How The Fed Moves Interest Rates |publisher=InformedTrades.com |author=David Waring |date=2008-02-19 |url=http://www.informedtrades.com/13694-explanation-how-fed-moves-interest-rates.html#post13846 |access-date=2009-07-20 |archive-url=https://web.archive.org/web/20150505173913/http://www.informedtrades.com/13694-explanation-how-fed-moves-interest-rates.html |archive-date=2015-05-05 |url-status=dead }}</ref>

The Federal Reserve has responded to a potential slow-down by lowering the target federal funds rate during [[recession]]s and other periods of lower growth. In fact, the committee's lowering has recently predated recessions,<ref name="york">{{cite web|url=http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html |title=Historical Changes of the Target Federal Funds and Discount Rates, 1971 to present |date=February 19, 2010 |publisher=New York Federal Reserve Branch |url-status=dead |archive-url=https://web.archive.org/web/20081221120546/http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html |archive-date=December 21, 2008 }}</ref> in order to stimulate the economy and cushion the fall. Reducing the federal funds rate makes money cheaper, allowing an influx of credit into the economy through all types of loans.

The charts referenced below show the relation between [[S&P 500]] and interest rates.

* July 13, 1990 – Sept 4, 1992: 8.00–3.00% (Includes [[early 1990s recession in the United States|1990–1991 recession]])<ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1990-06-12&en=1992-10-04&id=p73709284643|title=$SPX 1990-06-12 1992-10-04 (rate drop chart)|publisher=StockCharts.com}}</ref><ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1992-08-04&en=1995-03-01&id=p17832984723|title=$SPX 1992-08-04 1995-03-01 (rate rise chart)|publisher=StockCharts.com}}</ref>
* Feb 1, 1995 – Nov 17, 1998: 6.00–4.75 <ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1995-01-01&en=1997-01-01&id=p46263109672 |title=$SPX 1995-01-01 1997-01-01 (rate drop chart)|publisher=StockCharts.com}}</ref><ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1996-12-01&en=1998-10-17&id=p57529441624|title=$SPX 1996-12-01 1998-10-17 (rate drop chart)|publisher=StockCharts.com}}</ref><ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1998-09-17&en=2000-06-16&id=p08954335520|title=$SPX 1998-09-17 2000-06-16 (rate rise chart)|publisher=StockCharts.com}}</ref>
* May 16, 2000 – June 25, 2003: 6.50–1.00 (Includes [[early 2000s recession|2001 recession]])<ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=2000-04-16&en=2002-01-01&id=p71767151202|title=$SPX 2000-04-16 2002-01-01 (rate drop chart)|publisher=StockCharts.com}}</ref><ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=2002-01-01&en=2003-07-25&id=p76591879638|title=$SPX 2002-01-01 2003-07-25 (rate drop chart)|publisher=StockCharts.com}}</ref><ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=2003-06-25&en=2006-06-29&id=p75582346317|title=$SPX 2003-06-25 2006-06-29 (rate rise chart)|publisher=StockCharts.com}}</ref>
* June 29, 2006 – Oct 29, 2008: 5.25–1.00<ref>{{cite web|url=http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=2006-06-29&en=2008-06-01&id=p60366250738|publisher=StockCharts.com|title=$SPX 2006-06-29 2008-06-01 (rate drop chart)}}</ref>

[[Bill H. Gross|Bill Gross]] of [[PIMCO]] suggested that in the prior 15 years ending in 2007, in each instance where the fed funds rate was higher than the [[Gross domestic product|nominal GDP]] growth rate, assets such as stocks and housing fell.<ref>{{cite news|url=http://seekingalpha.com/article/23597-the-bond-yield-curve-as-an-economic-crystal-ball|title=The Bond Yield Curve as an Economic Crystal Ball|last=Shaw|first=Richard|date=January 7, 2007|access-date=3 April 2011}}</ref>

===Rates since 2008 global economic downturn===
{{main|History of Federal Open Market Committee actions}}
* Dec 16, 2008: 0.0–0.25<ref>{{cite web|url=http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm|date= December 16, 2008|title=Press Release|publisher=Board of Governors of The Federal Reserve System}}</ref>
* Dec 16, 2015: 0.25–0.50<ref>{{cite web|url=http://www.federalreserve.gov/monetarypolicy/openmarket.htm|title=Open Market Operations|date=December 16, 2015|publisher=Board of Governors of The Federal Reserve System}}</ref>
* Dec 14, 2016: 0.50–0.75<ref>{{cite web|url=https://www.federalreserve.gov/newsevents/press/monetary/20161214a1.htm |title=Decisions Regarding Monetary Policy Implementation |publisher=Board of Governors of The Federal Reserve System |url-status=dead |archive-url=https://web.archive.org/web/20161215091232/https://www.federalreserve.gov/newsevents/press/monetary/20161214a1.htm |archive-date=2016-12-15 }}</ref>
* Mar 15, 2017: 0.75–1.00<ref>{{Cite web|url=https://www.cnbc.com/2017/03/15/fed-raises-rates-at-march-meeting.html|title=Fed raises rates at March meeting|last=Cox|first=Jeff|date=2017-03-15|website=CNBC|access-date=2017-03-15}}</ref>
* Jun 14, 2017: 1.00–1.25<ref>{{cite web|url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20170614a.htm|title=Federal Reserve issues FOMC statement|date=June 14, 2017|publisher=Board of Governors of The Federal Reserve System}}</ref>
* Dec 13, 2017: 1.25–1.50<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20171213a.htm|title=Federal Reserve issues FOMC statement |date= December 13, 2017 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* Mar 21, 2018: 1.50–1.75<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20180321a.htm|title=Federal Reserve issues FOMC statement|date=March 21, 2018|publisher=Board of Governors of The Federal Reserve System}}</ref>
* Jun 13, 2018: 1.75–2.00<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20180613a.htm |title= Federal Reserve issues FOMC statement |date= June 13, 2018 |publisher=Board of Governors of The Federal Reserve System}}</ref>
* Sep 26, 2018: 2.00–2.25<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20180926a.htm|title=Federal Reserve issues FOMC statement |date= September 26, 2018 |publisher= Board of Governors of The Federal Reserve System}}</ref>
*Dec 19, 2018: 2.25–2.50<ref name=":0">{{cite web|url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20181219a.htm|title=Federal Reserve issues FOMC statement|date=December 19, 2018|publisher=Board of Governors of The Federal Reserve System}}</ref>
* Jul 31, 2019: 2.00–2.25<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20190731a.htm|title=Federal Reserve issues FOMC statement |date= July 31, 2019 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* Sep 18, 2019: 1.75–2.00<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20190918a.htm|title=Federal Reserve issues FOMC statement |date= September 18, 2019 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* Oct 30, 2019: 1.50–1.75<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20191030a.htm|title=Federal Reserve issues FOMC statement |date= October 30, 2019 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* Mar 3, 2020: 1.00–1.25<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20200303a.htm|title=Federal Reserve issues FOMC statement |date= March 3, 2020 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* Mar 15, 2020: 0.00–0.25<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm|title=Federal Reserve issues FOMC statement |date= March 15, 2020 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* Mar 16, 2022: 0.25–0.50<ref>{{cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20220316a.htm|title=Federal Reserve issues FOMC statement |date= March 16, 2022 |publisher= Board of Governors of The Federal Reserve System}}</ref>
* May 4, 2022: 0.75–1.00<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504a.htm |access-date=2022-05-04 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Jun 15, 2022: 1.50–1.75<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20220615a.htm |access-date=2022-06-15 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Jul 27, 2022: 2.25–2.50<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20220727a.htm |access-date=2022-07-27 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Sep 21, 2022: 3.00–3.25<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20220921a.htm |access-date=2022-09-21 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Nov 2, 2022: 3.75–4.00<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm |access-date=2022-11-02 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Dec 14, 2022: 4.25–4.50<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20221214a.htm |access-date=2022-12-14 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Feb 1, 2023: 4.50–4.75<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htm |access-date=2023-02-01 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Mar 22, 2023: 4.75–5.00<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htm |access-date=2023-03-22 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* May 3, 2023: 5.00–5.25<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20230503a.htm |access-date=2023-05-03 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Jul 26, 2023: 5.25–5.50<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20230726a.htm |access-date=2023-07-26 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Sep 18, 2024: 4.75–5.00<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm |access-date=2024-09-18 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Nov 7, 2024: 4.50–4.75<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm |access-date=2024-11-09 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Dec 18, 2024: 4.25–4.50<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20241218b.htm |access-date=2024-12-18 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Sep 17, 2025: 4.00–4.25<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20250917a.htm |access-date=2025-09-17 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>
* Oct 29, 2025: 3.75–4.00<ref>{{Cite web |title=Federal Reserve issues FOMC statement |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20251029a.htm |access-date=2025-10-29 |website=Board of Governors of the Federal Reserve System |language=en}}</ref>

==International effects==
A low federal funds rate makes investments in [[developing country|developing countries]] such as China or Mexico more attractive. A high federal funds rate makes investments outside the United States less attractive. The long period of a very low federal funds rate from 2009 forward resulted in an increase in investment in developing countries. As the United States began to return to a higher rate in the end of 2015 investments in the United States became more attractive and the rate of investment in developing countries began to fall. The rate also affects the value of currency, a higher rate slowing the decrease of the U.S. dollar and decreasing the value of currencies such as the [[Mexican peso]].<ref name="NYT031617">{{cite news|author1=[[Peter S. Goodman]], Keith Bradsher and Neil Gough|title=The Fed Acts. Workers in Mexico and Merchants in Malaysia Suffer.|url=https://www.nytimes.com/2017/03/16/business/federal-reserve-interest-rates-china-mexico.html|access-date=March 18, 2017|work=The New York Times|date=March 16, 2017|quote=Rising interest rates in the United States are driving money out of many developing countries, straining governments and pinching consumers around the globe.}}</ref>

==See also==
{{Div col|colwidth=25em}}
*[[Austrian Business Cycle Theory]]
*[[Bank rate]]
*[[Demand Management]]
*[[Eonia]]
*[[Equation of exchange]]
*[[Euro Interbank Offered Rate]]
*[[Federal Reserve Economic Data]]
*[[Inverted yield curve]]
*[[Modern Monetary Theory]]
*[[Monetary policy]]
*[[Mortgage industry of the United States]]
*[[Official cash rate]]
*[[Official bank rate]]
*[[Real interest rate]]
*[[SARON]]
*[[SONIA]]
*[[Taylor rule]]
*[[Zero interest rate policy]]
{{Div col end}}

==References==
{{Reflist|30em}}

==External links==
* [http://research.stlouisfed.org/fred2/series/FEDFUNDS Historical Data: Effective Federal Funds Rate] (interactive graph) from the [[Federal Reserve Bank of St. Louis]]
* [https://web.archive.org/web/20010413160651/http://www.federalreserve.gov/fomc/fundsrate.htm Federal Reserve Web Site: Federal Funds Rate Historical Data (including the current rate), Monetary Policy, and Open Market Operations]
* [http://www.moneycafe.com/library/fedfunds.htm  MoneyCafe.com page with Fed Funds Rate and historical chart and graph ]
* [https://web.archive.org/web/20070427113539/http://www.intelligentguess.com/blog/2007/03/01/usa-comparism-of-gdp-growth-versus-fed-rate-since-1954/ Historical data (since 1954) comparing the US GDP growth rate versus the US Fed Funds Rate - in the form of a chart/graph ]
* [https://web.archive.org/web/20080124110728/http://www.clevelandfed.org/research/policy/fedfunds/index.cfm Federal Reserve Bank of Cleveland: Fed Fund Rate Predictions]
* [http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm Federal Funds Rate Data including Daily effective overnight rate and Target rate]

{{Federal Reserve System}}
{{Reference rates}}

{{DEFAULTSORT:Federal Funds Rate}}
[[Category:Banking]]
[[Category:Federal Reserve System]]
[[Category:Interest rates]]