Latest bank decision: At its meeting on 20 August, the Central Bank decided to leave its policy rate unchanged at...
Federal Funds Target Rate in United States
The US Federal Reserve's policy rates over the last decade saw cycles of hiking and lowering. Post-financial crisis, rates were kept near zero until 2015, when the Fed started gradual hikes as the economy improved. However, in response to the COVID-19 pandemic, rates were quickly cut back to near zero in 2020. By 2022, in the face of rising inflation, the Fed initiated a series of rate hikes, marking a significant shift towards tighter monetary policy. The bank then reversed course in 2024, cutting rates as inflation declined.
The federal funds target rate ended 2024 at 4.50%, compared to the end-2023 value of 5.50% and the figure a decade earlier of 0.25%. It averaged 2.02% over the last decade. For more interest rate information, visit our dedicated page.
United States Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for United States from 2025 to 2024.
Source: Macrobond.
United States Interest Rate Data
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| Federal Funds Target Rate (%, eop) | 0.25 | 0.25 | 4.50 | 5.50 | 4.50 |
| Secured Overnight Financing Rate (%, eop) | 0.07 | 0.05 | 4.30 | 5.38 | 4.49 |
| 10-Year Bond Yield (%, eop) | 0.93 | 1.52 | 3.88 | 3.88 | 4.58 |
Central Bank decreases rates in September
Latest bank decision: At its meeting on 17 September, the Central Bank decided to lower the target range for the federal funds rate by 25 basis points to 4.00%–4.25%. This marked the first rate cut since last December.
Softening labor market drives cut: The key domestic factors driving the cut were weakening job growth and rising unemployment in recent months, together with only a muted inflation passthrough to date from higher tariffs.
More cuts to come: The Central Bank’s forward guidance suggests 50 basis points of extra cuts later this year followed by 25 basis points of cuts in 2026.
Panelist insight: Commenting on their revised forecasts, Nomura analysts said: “We have revised our forecast and now expect two additional cuts this year (we had previously forecast a pause in October and a cut in December). Less emphasis on inflation risks and a likely shift in Fed leadership next year leads us to forecast three additional cuts in 2026 in March, June, and September. We had previously expected the easing cycle to end after March.” United Overseas Bank’s Alvin Liew said: “The resumption of easing in the Sep FOMC meeting and the revision to the Sep Dotplot are aligned with our long-held view of three 25-bps rate cuts in 2025. Post-Sep FOMC rate cut, we continue to project two more 25-bps rate cuts in the remaining FOMC meetings this year, one each in Oct and Dec, primarily due to downside risks to growth and employment. This will bring the Fed Funds Target rate (FFTR) to 3.75% (upper bound of FFTR) by end-2025. We are also keeping our view for the two rate cuts for 2026, implying a terminal FFTR of 3.25% in 2026.”
Consensus Forecasts and Projections for the next ten years
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects American interest rate projections for the next ten years from a panel of 47 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for American interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our American interest rate projections.
Want to get access to the full dataset of American interest rate forecasts? Send an email to info@focus-economics.com.
Latest Global Monetary Policy News
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United Kingdom: Central Bank cuts rates in August Latest bank decision: On 7 August, the Central Bank voted to cut the Bank Rate from 4.25% to 4.00%, taking...