Rates Indicator
Federal Funds Rate (Target Range Upper Bound)
Updated 2026-03-19 · As Announced · Source: Federal Reserve · Next release: 2026-05-07
Historical Trend
| Date | Value |
|---|---|
| 2026-03 | 4.5% |
| 2025-06 | 4.5% |
| 2025-05 | 4.5% |
| 2025-03 | 4.5% |
| 2025-01 | 4.5% |
| 2024-12 | 4.5% |
| 2024-11 | 4.8% |
| 2024-09 | 5.0% |
| 2024-07 | 5.5% |
What This Means for Business
The Fed has held rates at 4.25-4.50% since December 2024, pausing after three cuts. For executives, this means borrowing costs remain elevated: corporate bond yields, commercial real estate financing, and revolving credit all price off the fed funds rate. The 'higher for longer' stance means capital-intensive projects need higher return hurdles. Companies with strong cash positions have an advantage over those reliant on debt financing.
About Fed Rate
The federal funds rate is the interest rate at which banks lend to each other overnight. Set by the Federal Reserve's FOMC, it is the most important interest rate in the world — influencing everything from mortgage rates to corporate borrowing costs to the value of the dollar.
Methodology
The FOMC (Federal Open Market Committee) meets eight times per year to set the target range. The actual rate is maintained through open market operations — the Fed buys or sells Treasury securities to increase or decrease bank reserves, pushing the overnight lending rate toward the target.
Related Indicators
Frequently Asked Questions
When will the Fed cut interest rates?
The Fed has signaled it needs to see sustained progress on inflation (toward the 2% target) before cutting rates. Markets currently price in 1-2 cuts in the second half of 2026, but the timing depends on inflation data, employment trends, and financial conditions. The Fed's dot plot (published quarterly) shows individual committee members' rate expectations.
How does the fed funds rate affect my business?
The fed funds rate affects businesses through multiple channels: 1) Direct borrowing costs — loans, credit lines, and bonds price off the fed rate. 2) Consumer spending — higher rates reduce mortgage demand, auto loans, and credit card spending. 3) Investment decisions — higher rates increase the cost of capital, making marginal projects uneconomic. 4) Currency — higher U.S. rates strengthen the dollar, affecting exporters and multinationals.
What is the neutral rate?
The neutral rate (r-star or r*) is the theoretical interest rate that neither stimulates nor restricts economic growth. Most Fed officials estimate it at 2.5-3.0%, meaning the current 4.50% rate is restrictive — deliberately slowing the economy to fight inflation. When the Fed eventually reaches neutral, monetary policy will no longer be a headwind.