The U.S. federal funds rate peaked in 2023 at its highest level since the 2007-08 financial crisis, reaching 5.33 percent by December 2023. A significant shift in monetary policy occurred in the second half of 2024, with the Federal Reserve implementing regular rate cuts. By December 2024, the rate had declined to 4.48 percent. What is a central bank rate? The federal funds rate determines the cost of overnight borrowing between banks, allowing them to maintain necessary cash reserves and ensure financial system liquidity. When this rate rises, banks become more inclined to hold rather than lend money, reducing the money supply. While this decreased lending slows economic activity, it helps control inflation by limiting the circulation of money in the economy. Historic perspective The federal funds rate historically follows cyclical patterns, falling during recessions and gradually rising during economic recoveries. Some central banks, notably the European Central Bank, went beyond traditional monetary policy by implementing both aggressive asset purchases and negative interest rates.

Graph and download economic data for Federal Funds Target Range - Upper Limit (DFEDTARU) from 2008-12-16 to 2025-08-23 about federal, interest rate, interest, rate, and USA.

The U.S. federal funds effective rate underwent a dramatic reduction in early 2020 in response to the COVID-19 pandemic. The rate plummeted from 1.58 percent in February 2020 to 0.65 percent in March, and further decreased to 0.05 percent in April. This sharp reduction, accompanied by the Federal Reserve's quantitative easing program, was implemented to stabilize the economy during the global health crisis. After maintaining historically low rates for nearly two years, the Federal Reserve began a series of rate hikes in early 2022, with the rate moving from 0.33 percent in April 2022 to 5.33 percent in August 2023. The rate remained unchanged for over a year, before the Federal Reserve initiated its first rate cut in nearly three years in September 2024, bringing the rate to 5.13 percent. By December 2024, the rate was cut to 4.48 percent, signaling a shift in monetary policy in the second half of 2024. In January 2025, the Federal Reserve implemented another cut, setting the rate at 4.33 percent, which remained unchanged throughout the following months. What is the federal funds effective rate? The U.S. federal funds effective rate determines the interest rate paid by depository institutions, such as banks and credit unions, that lend reserve balances to other depository institutions overnight. Changing the effective rate in times of crisis is a common way to stimulate the economy, as it has a significant impact on the whole economy, such as economic growth, employment, and inflation. Central bank policy rates The adjustment of interest rates in response to the COVID-19 pandemic was a coordinated global effort. In early 2020, central banks worldwide implemented aggressive monetary easing policies to combat the economic crisis. The U.S. Federal Reserve's dramatic reduction of its federal funds rate - from 1.58 percent in February 2020 to 0.05 percent by April - mirrored similar actions taken by central banks globally. While these low rates remained in place throughout 2021, mounting inflationary pressures led to a synchronized tightening cycle beginning in 2022, with central banks pushing rates to multi-year highs. By mid-2024, as inflation moderated across major economies, central banks began implementing their first rate cuts in several years, with the U.S. Federal Reserve, Bank of England, and European Central Bank all easing monetary policy.

Graph and download economic data for Interest Rates, Discount Rate for United States (INTDSRUSM193N) from Jan 1950 to Aug 2021 about discount, interest rate, interest, rate, and USA.

In June 2024, the European Central Bank (ECB) began reducing its fixed interest rate for the first time since 2016, implementing a series of cuts. The rate decreased from 4.5 percent to 3.15 percent by year-end: a 0.25 percentage point cut in June, followed by additional reductions in September, October, and December. The central bank implemented other cuts in the first half of 2025, setting the rate at 2.15 percent in June 2025. This marked a significant shift from the previous rate hike cycle, which began in July 2022 when the ECB raised rates to 0.5 percent and subsequently increased them almost monthly, reaching 4.5 percent by December 2023 - the highest level since the 2007-2008 global financial crisis. How does this ensure liquidity? Banks typically hold only a fraction of their capital in cash, measured by metrics like the Tier 1 capital ratio. Since this ratio is low, banks prefer to allocate most of their capital to revenue-generating loans. When their cash reserves fall too low, banks borrow from the ECB to cover short-term liquidity needs. On the other hand, commercial banks can also deposit excess funds with the ECB at a lower interest rate. Reasons for fluctuations
The ECB’s primary mandate is to maintain price stability. The Euro area inflation rate is, in theory, the key indicator guiding the ECB's actions. When the fixed interest rate is lower, commercial banks are more likely to borrow from the ECB, increasing the money supply and, in turn, driving inflation higher. When inflation rises, the ECB increases the fixed interest rate, which slows borrowing and helps to reduce inflation.

From 2003 to 2025, the central banks of the United States, United Kingdom, and European Union exhibited remarkably similar interest rate patterns, reflecting shared global economic conditions. In the early 2000s, rates were initially low to stimulate growth, then increased as economies showed signs of overheating prior to 2008. The financial crisis that year prompted sharp rate cuts to near-zero levels, which persisted for an extended period to support economic recovery. The COVID-19 pandemic in 2020 led to further rate reductions to historic lows, aiming to mitigate economic fallout. However, surging inflation in 2022 triggered a dramatic policy shift, with the Federal Reserve, Bank of England, and European Central Bank significantly raising rates to curb price pressures. As inflation stabilized in late 2023 and early 2024, the ECB and Bank of England initiated rate cuts by mid-2024, and the Federal Reserve also implemented its first cut in three years, with forecasts suggesting a gradual decrease in all major interest rates between 2025 and 2026. Divergent approaches within the European Union While the ECB sets a benchmark rate for the Eurozone, individual EU countries have adopted diverse strategies to address their unique economic circumstances. For instance, Hungary set the highest rate in the EU at 13 percent in September 2023, gradually reducing it to 6.5 percent by October 2024. In contrast, Sweden implemented more aggressive cuts, lowering its rate to two percent by June 2025, the lowest among EU members. These variations highlight the complex economic landscape that European central banks must navigate, balancing inflation control with economic growth support. Global context and future outlook The interest rate changes in major economies have had far-reaching effects on global financial markets. Government bond yields, for example, reflect these policy shifts and investor sentiment. As of December 2024, the United States had the highest 10-year government bond yield among developed economies at 4.59 percent, while Switzerland had the lowest at 0.27 percent. These rates serve as important benchmarks for borrowing costs and economic expectations worldwide.

Graph and download economic data for Federal Funds Target Rate (DISCONTINUED) (DFEDTAR) from 1982-09-27 to 2008-12-15 about federal, interest rate, interest, rate, and USA.

In June 2024, the European Central Bank (ECB) lowered its deposit facility interest rate for the first time in over two years, marking a shift in its monetary policy stance. This move was followed by a gradual adjustment, with the rate reaching 3.25 percent six months later. By December 2024, the ECB implemented an additional rate cut, bringing the rate down to three percent. In the first half of 2025, the ECB implemented four further cuts, setting the rate at two percent in June 2025. These reductions came after a prolonged period of steady rate increases, signaling a measured response to evolving economic conditions and a potential recalibration of its approach to support growth and stability.

The benchmark interest rate in Japan was last recorded at 0.50 percent. This dataset provides - Japan Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Graph and download economic data for 10-Year Real Interest Rate (REAINTRATREARAT10Y) from Jan 1982 to Aug 2025 about 10-year, interest rate, interest, real, rate, and USA.

The interest rate of business loans to small and medium enterprises (SMEs) in the United States in 2022 was lower than the average for all firms, which amounted to **** percent. However, the cost of lending money to SMEs was more expensive than to large firms between 2007 and 2019. The cost of lending decreased significantly for all types of businesses in 2020 and 2021.

Graph and download economic data for Federal Funds Target Range - Lower Limit (DFEDTARL) from 2008-12-16 to 2025-07-28 about federal, interest rate, interest, rate, and USA.

The benchmark interest rate in Georgia was last recorded at 8 percent. This dataset provides the latest reported value for - Georgia Interest Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

Mortgage credit interest rate, percent in Switzerland, March, 2025 The most recent value is 1.97 percent as of March 2025, an increase compared to the previous value of 1.86 percent. Historically, the average for Switzerland from February 2008 to March 2025 is 2.14 percent. The minimum of 1.24 percent was recorded in February 2020, while the maximum of 4.58 percent was reached in June 2008. | TheGlobalEconomy.com

Jordan JO: Real Interest Rate data was reported at 7.037 % pa in 2016. This records an increase from the previous number of 6.066 % pa for 2015. Jordan JO: Real Interest Rate data is updated yearly, averaging 6.066 % pa from Dec 1990 (Median) to 2016, with 27 observations. The data reached an all-time high of 12.781 % pa in 1999 and a record low of -9.045 % pa in 2008. Jordan JO: Real Interest Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s Jordan – Table JO.World Bank: Interest Rates. Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics and data files using World Bank data on the GDP deflator.; ;

Key information about China Long Term Interest Rate

• China Treasury Bond Yield: Interbank: Spot Yield: 10 year was reported at 1.73 % pa in Feb 2025, compared with 1.64 % pa in the previous month.
• China Long Term Interest Rate data is updated monthly, available from Jul 2008 to Feb 2025.
• The data reached an all-time high of 4.63 % pa in Dec 2013 and a record low of 1.64 % pa in Jan 2025.
• Long Term Interest Rate is reported by reported by National Interbank Funding Center.

• In the latest reports, China Short Term Interest Rate: Month End: SHIBOR: 3 Months was reported at 1.92 % pa in Feb 2025.
• The cash rate (Policy Rate: Month End: China: Rediscount Rate) was set at 2.65 % pa in Jun 2023.
• China Exchange Rate against USD averaged 7.16 (USD/RMB) in Jun 2023.

The benchmark interest rate in Oman was last recorded at 5 percent. This dataset provides the latest reported value for - Oman Interest Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

The benchmark interest rate in Mexico was last recorded at 7.75 percent. This dataset provides - Mexico Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Graph and download economic data for Interest Rate Paid on Required Reserve Balances (Institutions with 2-Week Maintenance Period) (DISCONTINUED) (INTREQ2) from 2008-10-22 to 2013-06-26 about 2-week, paid, maintenance, balance, reserves, interest rate, interest, rate, and USA.

The benchmark interest rate in Cape Verde was last recorded at 2.50 percent. This dataset provides the latest reported value for - Cape Verde Interest Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.