Federal Funds Effective Rate
FEDFUNDS • Economic Data from Federal Reserve Economic Data (FRED)
Latest Value
4.33
Year-over-Year Change
-18.76%
Date Range
7/1/1954 - 6/1/2025
Summary
The Federal Funds Effective Rate represents the average interest rate at which banks lend to each other overnight in the federal funds market. This critical economic indicator directly influences borrowing costs, monetary policy, and overall economic conditions in the United States.
Analysis & Context
This economic indicator provides valuable insights into current market conditions and economic trends. The data is updated regularly by the Federal Reserve and represents one of the most reliable sources for economic analysis.
Understanding this metric helps economists, policymakers, and investors make informed decisions about economic conditions and future trends. The interactive chart above allows you to explore historical patterns and identify key trends over time.
About This Dataset
The Federal Funds Effective Rate is a key benchmark interest rate determined by actual transactions between banks. Economists and policymakers closely monitor this rate as it reflects the Federal Reserve's monetary policy stance and provides insights into the broader financial system's liquidity and health.
Methodology
The rate is calculated daily by the Federal Reserve Bank of New York, based on the weighted average of overnight federal funds transactions reported by participating financial institutions. It represents the actual interest rates used in interbank lending.
Historical Context
The Federal Funds Effective Rate is a primary tool for the Federal Reserve to implement monetary policy, influencing everything from consumer loan rates to overall economic growth. Changes in this rate can impact inflation, employment, and economic expansion.
Key Facts
- Directly set by the Federal Open Market Committee (FOMC)
- Influences short-term borrowing costs across the economy
- Used as a benchmark for many other interest rates
- Reflects the Federal Reserve's economic outlook
- Impacts everything from mortgage rates to business loans
FAQs
Q: How does the Federal Funds Rate affect consumers?
A: The rate influences the cost of borrowing for consumers, affecting credit card rates, mortgage rates, and savings account yields.
Q: How often does the Federal Reserve change this rate?
A: The FOMC meets eight times a year and can adjust the rate based on economic conditions, though changes are not made at every meeting.
Q: What happens when the Federal Funds Rate increases?
A: Higher rates typically slow economic growth by making borrowing more expensive, which can help control inflation but may reduce economic activity.
Related Trends
Effective Federal Funds Rate: 25th Percentile
EFFR25
Secured Overnight Financing Volume
SOFRVOL
Longer Run FOMC Summary of Economic Projections for the Fed Funds Rate, Median
FEDTARMDLR
FOMC Summary of Economic Projections for the Fed Funds Rate, Central Tendency, High
FEDTARCTH
Discount Window Primary Credit Rate
DPCREDIT
Overnight Bank Funding Rate: 99th Percentile
OBFR99
Citation
U.S. Federal Reserve, Federal Funds Effective Rate [FEDFUNDS], retrieved from FRED.
Last Checked: 7/31/2025