Federal Funds Rate — Historical Chart
FEDFUNDSThe Fed's overnight lending rate between banks — the most important single number in finance. Higher rates cool inflation but slow growth and compress equity valuations. Every rate decision ripples through mortgages, corporate debt, and the dollar.
Related — Monetary Policy & Interest Rates
SOURCE: FEDERAL RESERVE ECONOMIC DATA (FRED) · 0 OBSERVATIONS
The federal funds rate is the interest rate at which banks lend reserve balances to other banks overnight. Set by the Federal Reserve's FOMC, it is the most influential number in global finance — every asset class, from mortgages to corporate bonds to equity valuations, is priced relative to this rate.
Related Economic Indicators
Frequently Asked Questions
- What is the federal funds rate?
- The federal funds rate is the target interest rate set by the Federal Open Market Committee (FOMC) for overnight lending between banks. It is the benchmark from which all other US interest rates are derived.
- How does the fed funds rate affect stocks?
- Higher rates increase the discount rate applied to future earnings, reducing the present value of stocks — especially long-duration growth stocks. They also increase borrowing costs, compressing corporate margins. Lower rates do the opposite, generally supporting equity valuations.
- How often does the Fed change rates?
- The FOMC meets 8 times per year (roughly every 6 weeks) and can change rates at any meeting. In emergencies, the Fed can also move rates between scheduled meetings, as it did in March 2020.
- What is the "neutral rate"?
- The neutral rate (r-star) is the theoretical fed funds rate that neither stimulates nor restrains the economy. Most estimates place it between 2.5–3.5%. Rates above neutral are "restrictive"; below neutral are "accommodative".
Economic data sourced from the Federal Reserve Bank of St. Louis (FRED). Data is updated according to the release schedule of the issuing agency. Provided for informational purposes only and does not constitute investment advice.