Federal Funds RateThe interest rate at which depository institutions lend reserve balances to other depository institutions overnight
Current Effective Rate
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Target Range...
Next FOMC MeetingJun 11-12, 2024
Historical Rates
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Recent Rate History
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OverviewThe federal funds rate is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. The rate that the borrowing institution pays to the lending institution is determined between the two banks; the weighted average rate for all of these types of negotiations is called the effective federal funds rate.
Recent FOMC DecisionsThe Federal Open Market Committee (FOMC) meets eight times a year to determine the federal funds target rate. The current target range is 5.25% to 5.50%, which was set at the July 2023 meeting and has remained unchanged in subsequent meetings.
May 1, 2024FOMC Meeting
The FOMC maintained the target range for the federal funds rate at 5.25% to 5.50%. The Committee stated that inflation remains elevated and noted that it does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
March 20, 2024FOMC Meeting
The FOMC maintained the target range for the federal funds rate at 5.25% to 5.50%. The Committee noted that inflation has eased over the past year but remains elevated, and that the economic outlook is uncertain.
January 31, 2024FOMC Meeting
The FOMC maintained the target range for the federal funds rate at 5.25% to 5.50%. The Committee stated that it does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
Impact on EconomyChanges in the federal funds rate influence other interest rates, including those for mortgages, auto loans, and credit cards. When the federal funds rate increases, borrowing becomes more expensive, which can slow economic growth and help control inflation. Conversely, when the rate decreases, borrowing becomes cheaper, which can stimulate economic growth.