Latest bank decision: At its meeting ending on 7 May, the Central Bank decided to maintain the target range for...
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 2022 at 4.50%, up from the 0.25% end-2021 value and from the reading of 0.25% a decade earlier. For reference, the average policy rate in Major Economies was 3.50% at end-2022. 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 March
Latest bank decision: At its meeting on 19 March, the Central Bank decided to maintain the target range for the federal funds rate at 4.25–4.50%.
Uncertain outlook and high prices drive hold: The Bank decided to stay put in light of inflation which is still above the 2.0% target despite dipping in February, and an increase in economic uncertainty under Donald Trump’s presidency.
Rate cuts still the base scenario: The Central Bank continued to anticipate it would cut rates by 50 basis points this year, unchanged from its previous forecasts in December. The Consensus among our panelists is for less than 50 basis points of cuts, with several panelists now seeing the Fed on hold for all of 2025 in light of upside risks to prices. Uncertainty over the interest rate outlook is unusually large due to Trump’s volatile trade and domestic economic policy.
Panelist insight: EIU analysts see three 25 basis-point rate cuts this year: “Ultimately, we believe that uncertainty will be the undoing of growth, which will force the Fed’s hand, as we expect slower growth (now 1.4% in 2025 in our forecast, revised down from 2% previously) and one more rate cut this year than the FOMC is currently projecting.” In contrast, United Overseas Bank’s Alvin Liew is more hawkish: “While we acknowledge the downside risk to growth has increased, we continue to err on the more cautious side towards inflation risk. We continue to hold our view of only one 25-bps cut in 2Q25 (likely Jun FOMC) and stay on hold for rest of the year at 4.25%.”
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 48 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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