Latest bank decision: At its meeting on 12 August, the Central Bank decided to cut the cash rate by 25...
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 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 leaves rates unchanged in July
Latest bank decision: At its meeting ending on 30 July, the Central Bank decided to maintain the target range for the federal funds rate at 4.25–4.50%, where it has been since last December.
Uncertain outlook and above-target inflation drive hold: The Bank decided to stay put in light of inflation which is still above the 2.0% target despite dipping so far this year, and elevated economic uncertainty under Donald Trump’s presidency as a result of volatile trade policy.
Rate cuts still the base scenario: The Fed’s median projection made in June was for 50 basis points of rate cuts later this year, which is broadly in line with the Consensus among our panelists. Uncertainty over the interest rate outlook is unusually large due to Trump’s unpredictable trade policy and doubts over the effects of this policy on economic activity and inflation.
Panelist insight: On the outlook, United Overseas Bank’s Alvin Liew said: “Although Chair Powell continues to advocate a wait-and-see approach amidst tariff uncertainty, the tilt towards disagreement by two governors in Jul, alongside a weaker growth assessment, reinforces our view that the Fed will resume its rate cuts. We continue to hold our view of three 25-bps cuts in 2025 to be executed at the Sep, Oct and Dec FOMC meetings. This will bring the FFTR to 3.75% (upper bound) by end-2025.” In contrast, Nomura analysts are more hawkish: “We continue to expect the Fed to keep rates on hold until December. Tariffs will likely put upward pressure on inflation data in the months ahead, and without clear signs of labor market stress, we expect policymakers will remain patient about resuming rate cuts.”
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 53 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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