Latest decision: On 30 July, the Central Bank voted to keep the bank rate at 3.75%, following cuts of 150...
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 2014 to 2025.
Source: Macrobond.
United States Interest Rate Data
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Federal Funds Target Rate (%, eop) | 0.25 | 4.50 | 5.50 | 4.50 | 3.75 |
| Secured Overnight Financing Rate (%, eop) | 0.05 | 4.30 | 5.38 | 4.49 | 3.85 |
| 10-Year Bond Yield (%, eop) | 1.52 | 3.88 | 3.88 | 4.58 | 4.12 |
Central Bank keeps rates steady in July
Decision was not unanimous: At its late July meeting, the Central Bank kept the target range for the federal funds rate at 3.50–3.75%, following 75 basis points of rate cuts from August to December last year. However, three board members voted to hike rates.
Fed maintains wait-and-see approach: The Fed decided not to hike despite inflation having remained above the 2.0% target for multiple years and upside risks to the inflation outlook from renewed U.S.-Iran conflict. Weak jobs data for June, the recent tightening in market financial conditions and more-benign-than-anticipated June inflation likely helped stay the Fed’s hand.
Our Consensus is for rates to stay steady: The Fed’s June forecasts suggest the funds rate could be hiked later this year, in contrast to previous projections for monetary easing. Despite this, our Consensus is currently for the rate to end 2026 around its current level, before mild monetary easing in 2027 as inflation fades.
Panelist insight: On the outlook, ING analysts said: “If we are right, and we do see further evidence of disinflation and cooler jobs data, then we expect to see the market pricing of rate hikes moderate. That could culminate in the Fed leaving the policy rate unchanged for a prolonged period rather than hiking once and then cutting again in 2027 as they are currently projecting within their summary of economic projections.” Nomura analysts concurred: “We continue to expect the Fed to remain on hold indefinitely. Warsh appears reluctant to raise rates proactively, and we continue to expect easing inflation momentum to provide cover for a patient approach. That said, a sharp increase in market-implied long-term inflation expectations increases a risk of the Fed reacting hawkishly to signs of stalled disinflation.”
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 57 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.
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