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.

The inflation rate in the United States declined significantly between June 2022 and June 2025, despite rising inflationary pressures towards the end of 2024. The peak inflation rate was recorded in June 2022, at *** percent. In August 2023, the Federal Reserve's interest rate hit its highest level during the observed period, at **** percent, and remained unchanged until September 2024, when the Federal Reserve implemented its first rate cut since September 2021. By January 2025, the rate dropped to **** percent, signalling a shift in monetary policy. What is the Federal Reserve interest rate? The Federal Reserve interest rate, or the federal funds rate, is the rate at which banks and credit unions lend to and borrow from each other. It is one of the Federal Reserve's key tools for maintaining strong employment rates, stable prices, and reasonable interest rates. The rate is determined by the Federal Reserve and adjusted eight times a year, though it can be changed through emergency meetings during times of crisis. The Fed doesn't directly control the interest rate but sets a target rate. It then uses open market operations to influence rates toward this target. Ways of measuring inflation Inflation is typically measured using several methods, with the most common being the Consumer Price Index (CPI). The CPI tracks the price of a fixed basket of goods and services over time, providing a measure of the price changes consumers face. At the end of 2023, the CPI in the United States was ****** percent, up from ****** a year earlier. A more business-focused measure is the producer price index (PPI), which represents the costs of firms.

Graph and download economic data for Federal Funds Target Range - Upper Limit (DFEDTARU) from 2008-12-16 to 2025-09-01 about federal, interest rate, interest, rate, and USA.

The benchmark interest rate in the United States was last recorded at 4.50 percent. This dataset provides the latest reported value for - United States Fed Funds Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest *** trillion U.S. dollars at the end of 2007, it ballooned to approximately **** trillion U.S. dollars by July 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic - both of which resulted in negative annual GDP growth in the U.S. - showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached ***** percent in 2022, the highest since 1991. However, by *********, inflation had declined to *** percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at **** percent in ***********, before the first rate cut since ************** occurred in **************. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2023, the Fed reported a negative net income of ***** billion U.S. dollars, a stark contrast to the ***** billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over *** billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of ****** billion U.S. dollars in the same year.

In June 2025, global inflation rates and central bank interest rates showed significant variation across major economies. Most economies initiated interest rate cuts from mid-2024 due to declining inflationary pressures. The U.S., UK, and EU central banks followed a consistent pattern of regular rate reductions throughout late 2024. In the first half of 2025, Russia maintained the highest interest rate at 20 percent, while Japan retained the lowest at 0.5 percent. Varied inflation rates across major economies The inflation landscape varies considerably among major economies. China had the lowest inflation rate at 0.1 percent in June 2025. In contrast, Russia maintained a high inflation rate of 9.4 percent. These figures align with broader trends observed in early 2025, where China had the lowest inflation rate among major developed and emerging economies, while Russia's rate remained the highest. Central bank responses and economic indicators Central banks globally implemented aggressive rate hikes throughout 2022-23 to combat inflation. The European Central Bank exemplified this trend, raising rates from 0 percent in January 2022 to 4.5 percent by September 2023. A coordinated shift among major central banks began in mid-2024, with the ECB, Bank of England, and Federal Reserve initiating rate cuts, with forecasts suggesting further cuts through 2025 and 2026.

United States - Economic Policy Uncertainty : Categorical : Government spending was 518.23298 Index in March of 2025, according to the United States Federal Reserve. Historically, United States - Economic Policy Uncertainty : Categorical : Government spending reached a record high of 635.27178 in August of 2011 and a record low of 5.77724 in September of 2006. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Economic Policy Uncertainty : Categorical : Government spending - last updated from the United States Federal Reserve on August of 2025.

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.

Key information about United States Short Term Interest Rate

• United States Short Term Interest Rate: Month End: Treasury Bills: 3 Months was reported at 4.20 % pa in Feb 2025, compared with 4.20 % pa in the previous month.
• US Short Term Interest Rate data is updated monthly, available from Jan 1954 to Feb 2025.
• The data reached an all-time high of 15.52 % pa in Aug 1981 and a record low of -0.01 % pa in Sep 2015.
• Short Term Interest Rate is reported by reported by Federal Reserve Board.

• In the latest reports, US Treasury Notes Yield: Constant Maturity: Nominal: 10 Years was reported at 4.45 % pa in Feb 2025.
• The cash rate (Policy Rate: Month End: Effective Federal Funds Rate) was set at 4.33 % pa in Feb 2025.

Migration Policy Uncertainty for the United States was 1525.92862 Index in April of 2025, according to the United States Federal Reserve. Historically, Migration Policy Uncertainty for the United States reached a record high of 2075.59761 in January of 2025 and a record low of 32.67928 in October of 1997. Trading Economics provides the current actual value, an historical data chart and related indicators for Migration Policy Uncertainty for the United States - last updated from the United States Federal Reserve on August of 2025.

United States - Economic Policy Uncertainty : Categorical : Regulation was 469.68583 Index in May of 2025, according to the United States Federal Reserve. Historically, United States - Economic Policy Uncertainty : Categorical : Regulation reached a record high of 469.68583 in May of 2025 and a record low of 28.19341 in July of 1999. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Economic Policy Uncertainty : Categorical : Regulation - last updated from the United States Federal Reserve on August of 2025.

United States - Rest of the World; Policy Payables of Non-U.S. Reinsurers; Liability, Transactions was 20628.00000 Mil. of $ in January of 2025, according to the United States Federal Reserve. Historically, United States - Rest of the World; Policy Payables of Non-U.S. Reinsurers; Liability, Transactions reached a record high of 31900.00000 in October of 2024 and a record low of -10856.00000 in October of 2006. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Rest of the World; Policy Payables of Non-U.S. Reinsurers; Liability, Transactions - last updated from the United States Federal Reserve on September of 2025.

United States - Global Economic Policy Uncertainty : Current Price Adjusted GDP was 394.04512 Index in July of 2025, according to the United States Federal Reserve. Historically, United States - Global Economic Policy Uncertainty : Current Price Adjusted GDP reached a record high of 603.56461 in April of 2025 and a record low of 47.75745 in July of 2007. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Global Economic Policy Uncertainty : Current Price Adjusted GDP - last updated from the United States Federal Reserve on August of 2025.

Canada's inflation rate experienced significant fluctuations from 2018 to 2025. Inflation peaked at *** percent in June 2022 before steadily declining to *** percent by December 2024. In early 2025, inflation began to increase again, rising to *** percent in February, and dropping to *** percent in March. In response to rising inflation between 2020 and 2022, the Bank of Canada implemented aggressive interest rate hikes. The bank rate reached a maximum of **** percent in July 2023 and remained stable until June 2024. As inflationary pressures eased in the second half of 2024, the central bank reduced interest rates to *** percent in December 2024. In 2025, the bank rate witnessed two cuts, standing at ***** percent in June 2025. This pattern reflected broader global economic trends, with most advanced and emerging economies experiencing similar inflationary challenges and monetary policy adjustments. Global context of inflation and interest rates The Canadian experience aligns with the broader international trend of central banks raising policy rates to combat inflation. Between 2021 and 2023, nearly all advanced and emerging economies increased their central bank rates. However, a shift occurred in the latter half of 2024, with many countries, including Canada, beginning to lower rates. This change suggests a new phase in the global economic cycle and monetary policy approach. Notably, among surveyed countries, Russia maintained the highest interest rate in early 2025, while Japan had the lowest rate. Comparison with the United States The United States experienced a similar trajectory in inflation and interest rates. U.S. inflation peaked at *** percent in June 2022, slightly higher than Canada's peak. The Federal Reserve responded with a series of rate hikes, reaching **** percent in August 2023. This rate remained unchanged until September 2024, when the first cut since September 2021 was implemented. In contrast, Canada's bank rate peaked at **** percent and began decreasing earlier, with cuts in June and July 2024. These differences highlight the nuanced approaches of central banks in managing their respective economies amid global inflationary pressures.

Graph and download economic data for ECB Deposit Facility Rate for Euro Area (ECBDFR) from 1999-01-01 to 2025-09-01 about overnight, Euro Area, deposits, Europe, and rate.

United States - Equity Market Volatility Tracker: Policy Related was 12.94385 Index in June of 2025, according to the United States Federal Reserve. Historically, United States - Equity Market Volatility Tracker: Policy Related reached a record high of 40.54302 in April of 2025 and a record low of 3.77556 in June of 1985. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Equity Market Volatility Tracker: Policy Related - last updated from the United States Federal Reserve on August of 2025.

United States - Federal Government; Policy Loans; Asset, Transactions was -2.00000 Mil. of $ in January of 2024, according to the United States Federal Reserve. Historically, United States - Federal Government; Policy Loans; Asset, Transactions reached a record high of 380.00000 in January of 1987 and a record low of -657.00000 in January of 1988. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Federal Government; Policy Loans; Asset, Transactions - last updated from the United States Federal Reserve on August of 2025.

United States - Equity Market Volatility Tracker: National Security Policy was 6.31395 Index in June of 2025, according to the United States Federal Reserve. Historically, United States - Equity Market Volatility Tracker: National Security Policy reached a record high of 34.22301 in April of 2025 and a record low of 0.52627 in June of 1985. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Equity Market Volatility Tracker: National Security Policy - last updated from the United States Federal Reserve on August of 2025.

United States - Equity Market Volatility Tracker: Healthcare Policy was 4.46463 Index in July of 2025, according to the United States Federal Reserve. Historically, United States - Equity Market Volatility Tracker: Healthcare Policy reached a record high of 7.38297 in March of 2025 and a record low of 0.00000 in August of 1985. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Equity Market Volatility Tracker: Healthcare Policy - last updated from the United States Federal Reserve on September of 2025.

United States - Equity Market Volatility Tracker: Trade Policy was 7.89243 Index in June of 2025, according to the United States Federal Reserve. Historically, United States - Equity Market Volatility Tracker: Trade Policy reached a record high of 50.26505 in April of 2025 and a record low of 0.00000 in February of 1986. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - Equity Market Volatility Tracker: Trade Policy - last updated from the United States Federal Reserve on August of 2025.