Federal Funds Target Rate in United States
The US Federal Reserve's policy rates from 2013 to 2022 saw a cycle of hiking, lowering, and again hiking. 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 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
United States Interest Rate Data
|Federal Funds Target Rate (%, eop)||2.50||1.75||0.25||0.25||4.50|
|Secured Overnight Financing Rate (%, eop)||3.00||1.55||0.07||0.05||4.30|
|10-Year Bond Yield (%, eop)||2.69||1.92||0.93||1.52||3.88|
Fed keeps rates unchanged in November
At the meeting ending on 1 November, the Federal Open Market Committee (FOMC) left the target range for the federal funds rate at 5.25%–5.50% for the second straight meeting.
The decision was driven by the desire to assess the impact of past rate hikes, which total 525 basis points since early 2022. Moreover, both headline and core inflation have come down sharply so far this year, while the recent rise in bond yields has tightened financial conditions and reduced the urgency to continue hiking.
The Fed continued to suggest that it might hike rates ahead, though most panelists judge that the Fed is done with hiking and only a few panelists see one final 25 basis-point rate increase later this year. Expected slowdowns in inflation and economic activity in the coming months should support the Fed’s decision to remain on hold. Our Consensus is then for monetary policy easing in 2024, with rates seen ending the year about 100 basis points below their end-2023 level. That said, the risks to our Consensus are likely skewed to the upside in light of surprisingly robust economic activity in recent months, which if it persists could translate into stronger price pressures.
On the latest meeting and outlook, Nomura analysts said: “In our view, the Fed are uncertain about the medium-term path for policy, but are content to remain in ‘wait-and-see’ mode for now. The dovish statement and press conference supports our expectation of no more rate hikes while uncertainty for the medium term monetary policy outlook remains.” In contrast, TD Economics’ James Orlando was more hawkish: “GDP posted a 4.9% quarter-on-quarter gain in Q3, retail sales have been surging, and wage growth has been rising at a pace well above the level necessary to bring inflation back to the 2% target […] While Chair Powell has been evenhanded in his statements about whether the Fed needs to hike again, the strength of the economy has opened the door for another rate hike. And we believe that the Fed would be right to walk through it.”
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 46 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.
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