The inflation rate in the United States declined significantly between June 2022 and January 2025, despite rising inflationary pressures towards the end of 2024. The peak inflation rate was recorded in June 2022, at 9.1 percent. In August 2023, the Federal Reserve's interest rate hit its highest level during the observed period, at 5.33 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 4.33 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 158.11 percent, up from 153.12 a year earlier. A more business-focused measure is the producer price index (PPI), which represents the costs of firms.

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. The first rate cut in 2025 then set the rate at 4.33 percent. 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.

In January 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 early 2025, Russia maintained the highest interest rate at 21 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 0.5 percent in January 2025. In contrast, Russia maintained a high inflation rate of 9.9 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.

The benchmark interest rate In the Euro Area was last recorded at 2.65 percent. This dataset provides - Euro Area Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

The benchmark interest rate in Mexico was last recorded at 9.50 percent. This dataset provides - Mexico Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Graph and download economic data for Federal Funds Target Range - Upper Limit (DFEDTARU) from 2008-12-16 to 2025-03-26 about federal, interest rate, interest, rate, and USA.

The benchmark interest rate in Sweden was last recorded at 2.25 percent. This dataset provides the latest reported value for - Sweden 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 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.

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 Jan 2025.

The benchmark interest rate in Switzerland was last recorded at 0.25 percent. This dataset provides - Switzerland Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

August 2024 marked a significant shift in the UK's monetary policy, as it saw the first reduction in the official bank base interest rate since August 2023. This change came after a period of consistent rate hikes that began in late 2021. In a bid to minimize the economic effects of the COVID-19 pandemic, the Bank of England cut the official bank base rate in March 2020 to a record low of 0.1 percent. This historic low came just one week after the Bank of England cut rates from 0.75 percent to 0.25 percent in a bid to prevent mass job cuts in the United Kingdom. It remained at 0.1 percent until December 2021 and was increased to one percent in May 2022 and to 2.25 percent in October 2022. After that, the bank rate increased almost on a monthly basis, reaching 5.25 percent in August 2023. It wasn't until August 2024 that the first rate decrease since the previous year occurred, signaling a potential shift in monetary policy. Why do central banks adjust interest rates? Central banks, including the Bank of England, adjust interest rates to manage economic stability and control inflation. Their strategies involve a delicate balance between two main approaches. When central banks raise interest rates, their goal is to cool down an overheated economy. Higher rates curb excessive spending and borrowing, which helps to prevent runaway inflation. This approach is typically used when the economy is growing too quickly or when inflation is rising above desired levels. Conversely, when central banks lower interest rates, they aim to encourage borrowing and investment. This strategy is employed to stimulate economic growth during periods of slowdown or recession. Lower rates make it cheaper for businesses and individuals to borrow money, which can lead to increased spending and investment. This dual approach allows central banks to maintain a balance between promoting growth and controlling inflation, ensuring long-term economic stability. Additionally, adjusting interest rates can influence currency values, impacting international trade and investment flows, further underscoring their critical role in a nation's economic health. Recent interest rate trends Between 2021 and 2024, most advanced and emerging economies experienced a period of regular interest rate hikes. This trend was driven by several factors, including persistent supply chain disruptions, high energy prices, and robust demand pressures. These elements combined to create significant inflationary trends, prompting central banks to raise rates in an effort to temper spending and borrowing. However, in 2024, a shift began to occur in global monetary policy. The European Central Bank (ECB) was among the first major central banks to reverse this trend by cutting interest rates. This move signaled a change in approach aimed at addressing growing economic slowdowns and supporting growth.

Graph and download economic data for Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity, Quoted on an Investment Basis (DGS30) from 1977-02-15 to 2025-03-24 about 30-year, maturity, Treasury, interest rate, interest, rate, and USA.

Between January 2018 and January 2025, Germany's inflation rate experienced significant volatility. Initially fluctuating between 0.3 and 3.1 percent, the rate escalated dramatically, reaching a peak of 10.4 percent in October 2022. By September 2024, the inflation rate had moderated to 1.6 percent. However, inflation began rising again towards the end of 2024, standing at 2.6 percent in December. The European Central Bank (ECB) responded to these inflationary pressures with a series of interest rate adjustments. After maintaining historically low rates, the ECB initiated its first rate hike since March 2016 in July 2022, raising the rate to 0.5 percent. The interest rate continued to increase, stabilizing at 4.5 percent from September 2023 to June 2024. In a notable shift, June 2024 marked the first rate cut during this period. It was followed by a series of rate cuts until the end of the year, with the last cut in 2024 setting the rate at 3.15 percent.

Key information about Luxembourg Short Term Interest Rate

• Luxembourg Short Term Interest Rate: Month End: EURIBOR: 3 Months was reported at -0.57 % pa in Nov 2021, compared with -0.55 % pa in the previous month.
• Luxembourg Short Term Interest Rate data is updated monthly, available from Dec 1998 to Nov 2021.
• The data reached an all-time high of 5.28 % pa in Sep 2008 and a record low of -0.57 % pa in Nov 2021.
• Short Term Interest Rate is reported by reported by European Money Markets Institute.

• In the latest reports, Luxembourg Long Term Interest Rate: Month Avg: Luxembourg: ECB Harmonised was reported at 3.16 % pa in Sep 2023.
• The cash rate (Policy Rate: Month End: Main Refinancing Operations) was set at 4.50 % pa in Sep 2023.
• Luxembourg Exchange Rate against USD averaged 0.92 (USD/EUR) in Jun 2023.

Indonesia Banking Survey: Expectation: Loan Interest Rate: in Rupiah: Housing/Property data was reported at 9.025 % in Dec 2024. This records a decrease from the previous number of 9.174 % for Sep 2024. Indonesia Banking Survey: Expectation: Loan Interest Rate: in Rupiah: Housing/Property data is updated quarterly, averaging 11.430 % from Jun 2012 (Median) to Dec 2024, with 51 observations. The data reached an all-time high of 12.850 % in Jun 2015 and a record low of 8.963 % in Sep 2023. Indonesia Banking Survey: Expectation: Loan Interest Rate: in Rupiah: Housing/Property data remains active status in CEIC and is reported by Bank Indonesia. The data is categorized under Indonesia Premium Database’s Business and Economic Survey – Table ID.SE003: Banking Survey: Interest Rate. [COVID-19-IMPACT]

Graph and download economic data for Market Yield on U.S. Treasury Securities at 5-Year Constant Maturity, Quoted on an Investment Basis (DGS5) from 1962-01-02 to 2025-03-20 about maturity, Treasury, interest rate, interest, 5-year, rate, and USA.

CN: IRS: Fixed Interest Rate: 10 Year GB: 1 Year data was reported at 2.680 % pa in Sep 2023. This records a decrease from the previous number of 2.850 % pa for Nov 2022. CN: IRS: Fixed Interest Rate: 10 Year GB: 1 Year data is updated monthly, averaging 2.845 % pa from Dec 2021 (Median) to Sep 2023, with 7 observations. The data reached an all-time high of 2.866 % pa in Jan 2022 and a record low of 2.600 % pa in Sep 2022. CN: IRS: Fixed Interest Rate: 10 Year GB: 1 Year data remains active status in CEIC and is reported by National Interbank Funding Center. The data is categorized under China Premium Database’s Money Market, Interest Rate, Yield and Exchange Rate – Table CN.MG: National Interbank Funding Centre (NIFC): Interest Rate Swap: Fixed Interest Rate.

Key information about Kenya Long Term Interest Rate

• Kenya Treasury Bonds Rate: 10 Years was reported at 16.39 % pa in Jun 2024, compared with 16.23 % pa in the previous month.
• Kenya Long Term Interest Rate data is updated monthly, available from Dec 2003 to Jun 2024.
• The data reached an all-time high of 17.93 % pa in Sep 2023 and a record low of 0.00 % pa in Jun 2021.
• Long Term Interest Rate is reported by reported by Central Bank of Kenya.

• In the latest reports, Kenya Short Term Interest Rate: Monthly Average: Treasury Bills Rate: 91 Days was reported at 13.06 % pa in Nov 2024.
• The cash rate (Policy Rate: Month End: Central Bank Rediscount Rate) was set at 10.75 % pa in Feb 2025.
• Kenya Exchange Rate against USD averaged 139.70 (USD/KES) in Jun 2023.

The benchmark interest rate in Brazil was last recorded at 14.25 percent. This dataset provides - Brazil Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

The inflation rate in Israel increased to just over 3.82 percent in January 2025. This was the highest level since September 2023. During the observed period, inflation rates peaked at 5.4 percent in January 2022. Following a period of interest rate hikes, the Bank of Israel decided to lower its declared interest rate in January 2024.