Current Federal Funds Rate
The Fed's benchmark interest rate — updated after every FOMC meeting. Affects mortgages, credit cards, savings accounts, and the broader economy.
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What Is the Federal Funds Rate?
The federal funds rate is the interest rate at which banks lend money to each other overnight. The Federal Open Market Committee (FOMC) sets a target range for this rate and uses open market operations to keep the actual rate within that range.
It's the most powerful short-term policy tool the Federal Reserve has. Changes to it ripple through the entire economy within months.
How It Affects Your Money
- Mortgages: Variable-rate mortgages track the Fed rate. Fixed rates are indirectly influenced through the bond market.
- Credit cards: Most credit card APRs are directly tied to the prime rate, which moves with the Fed rate.
- Savings accounts & CDs: High-yield savings rates and CD yields rise and fall with the Fed rate.
- Auto loans: New car loan rates typically move within months of Fed rate changes.
- Stock market: Lower rates reduce the discount rate used to value future earnings, generally boosting equity prices. Higher rates do the opposite.
Recent Rate History
The Fed raised rates aggressively from 2022 to 2023 to combat post-pandemic inflation, peaking at 5.25%–5.50%. It then cut rates three times in late 2025 before pausing at the current range.
| Date | Target Range | Change | Reason |
|---|---|---|---|
| Mar 18, 2026 | 3.50–3.75% | Hold | Elevated inflation, Middle East uncertainty |
| Jan 28, 2026 | 3.50–3.75% | Hold | Continued wait-and-see stance |
| Dec 18, 2025 | 3.50–3.75% | −0.25% | Third consecutive cut; inflation declining |
| Nov 7, 2025 | 3.75–4.00% | −0.25% | Continued easing cycle |
| Sep 18, 2025 | 4.00–4.25% | −0.25% | First cut of easing cycle |
| Jul 30, 2025 | 4.25–4.50% | Hold | Holding ahead of first expected cut |
| Jan 29, 2025 | 4.25–4.50% | Hold | Inflation still above target |
| Dec 18, 2024 | 4.25–4.50% | −0.25% | Third cut of 2024 |
| Nov 7, 2024 | 4.50–4.75% | −0.25% | Second cut of 2024 |
| Sep 18, 2024 | 4.75–5.00% | −0.50% | First cut since 2020 — jumbo cut |
| Jul 26, 2023 | 5.25–5.50% | +0.25% | Final hike of the tightening cycle |
| Mar 16, 2022 | 0.25–0.50% | +0.25% | First hike since 2018 — start of tightening |
| Mar 15, 2020 | 0.00–0.25% | −1.00% | Emergency cut — COVID-19 pandemic |
What Comes Next?
As of March 2026, the Fed's median dot plot projects one quarter-point cut in 2026 and one more in 2027, bringing the target range to approximately 3.00%–3.25% by end of 2027. However, with inflation remaining somewhat elevated and Middle East tensions adding uncertainty, the path is not guaranteed.
Markets are pricing in roughly one cut in 2026, likely in the second half of the year, conditional on inflation continuing to fall.
How the Fed Decides
The FOMC meets eight times per year. Members vote on whether to raise, lower, or hold the target range based on their dual mandate: maximum employment and price stability (targeting 2% inflation). Key data inputs include CPI, PCE, unemployment, GDP growth, and global economic conditions.
Common Questions
What is the current federal funds rate?
The target range is 3.50%–3.75%, held at the March 18, 2026 FOMC meeting. The midpoint is 3.625%.
When is the next Fed meeting?
The next FOMC meeting is May 6–7, 2026. After that: June 17–18, July 28–29, September 15–16, October 28–29, and December 9–10.
How does the Fed rate affect mortgage rates?
Variable-rate mortgages (ARMs) adjust directly with the Fed rate. Fixed mortgage rates are more influenced by 10-year Treasury yields, which move alongside — but not in lockstep with — the Fed funds rate.
What's the difference between the Fed funds rate and the prime rate?
The prime rate is set by commercial banks at 3 percentage points above the Fed funds rate. If the Fed rate is 3.625%, the prime rate is approximately 6.625%. Credit cards and HELOCs are typically pegged to the prime rate.
What was the highest Fed funds rate in history?
The Fed funds rate peaked at around 20% in 1981, when Fed Chair Paul Volcker used aggressive rate hikes to break the inflation of the late 1970s.