Direct Answer
The Federal Reserve's federal funds rate (the overnight lending rate between banks) has ranged from 0-0.25% (near zero, 2008-2015 and 2020-2022) to 20% in 1981. The most aggressive modern tightening cycle was 2022-2023: the Fed raised rates from 0-0.25% to 5.25-5.50% in 16 months (11 increases), the fastest pace since 1980. As of September 2026 the target range is 3.75-4.0%, after three cuts in late 2025 and a quarter-point increase effective September 17, 2026.
Federal Funds Rate History
Federal Funds Rate Target at Year End (Selected Years)
| Year / Date | Fed Funds Target Rate | Notable Event |
|---|---|---|
| 1980 | 18.0-21.0% range | Volcker inflation fight |
| 1981 | 12.0% | Rate cuts begin |
| 1985 | 8.0% | |
| 1990 | 7.0% | |
| 1995 | 5.5% | |
| 2000 | 6.5% | Dot-com peak |
| 2001 | 1.75% | Post-9/11 and dot-com recession cuts |
| 2004 | 2.25% | |
| 2006 | 5.25% | Hiking cycle peak |
| 2008 | 0-0.25% | Financial crisis emergency cuts |
| 2009-2015 | 0-0.25% | Zero lower bound |
| 2015 | 0.25-0.5% | First hike since 2006 |
| 2018 | 2.25-2.5% | |
| 2019 | 1.5-1.75% | Insurance cuts |
| 2020 | 0-0.25% | COVID emergency |
| 2022 (end) | 4.25-4.5% | Fastest tightening since 1980 |
| 2023 (end) | 5.25-5.5% | Cycle peak |
| Sep 2024 | 4.75-5.0% | First cut since 2020 |
| 2024 (end) | 4.25-4.5% | Three cuts in the last four months of 2024 |
| 2025 (end) | 3.5-3.75% | Cuts effective September 18, October 30 and December 11 |
| Sep 2026 | 3.75-4.0% | First increase since July 2023, effective September 17 |
Source: Federal Reserve: Federal Open Market Committee. Last verified: October 2026, checked against the Federal Reserve open market operations table.
Frequently asked questions
How does the fed funds rate affect everyday borrowing?
The federal funds rate directly influences short-term borrowing costs throughout the economy. Prime Rate (used for credit cards, home equity lines, many variable loans) = Fed funds rate + 3%. A rate increase from 0% to 5.25% raised the prime rate from 3.25% to 8.5%, which directly raised credit card rates, auto loan rates, and home equity line rates. Fixed mortgage rates track the 10-year Treasury (not the fed funds rate), but rising short-term rates typically pull up long-term rates too. Student loan variable rates, small business loans, and corporate floating-rate debt are all tied to SOFR (which tracks the fed funds rate closely).
Why did the Fed cut rates in September 2024?
The Federal Reserve cut rates by 50 basis points in September 2024 (first cut since COVID emergency cuts in 2020), citing: (1) inflation falling toward the 2% target (CPI had declined from 9.1% in June 2022 to approximately 2.5% by mid-2024); (2) labor market softening (unemployment rose from 3.4% to 4.3%); (3) concern about overtightening (the real fed funds rate was approximately +2.5% above inflation, considered significantly restrictive). The 50bp cut was larger than expected (consensus expected 25bp), signaling the Fed prioritized preventing labor market deterioration over inflation caution.
What is the neutral rate and why does it matter?
The neutral rate (r*) is the theoretical fed funds rate that neither stimulates nor restricts the economy -- the rate consistent with full employment and 2% inflation in equilibrium. The Fed and economists disagree on r*; pre-2022 consensus was approximately 2.5%. Post-2022, some economists argue r* has risen to 3-3.5% due to higher structural deficits, energy transition investment needs, and de-globalization pressures. The neutral rate matters because it determines whether current policy is restrictive or accommodative -- at 5.25%, with r* at 2.5%, the policy rate was approximately 275bp above neutral (very restrictive). If r* rose to 3.5%, policy was only 175bp above neutral (moderately restrictive).
Cite This Page
If you reference this table in your own work, use the following citation format and add the date you accessed it:
Swoopr Editorial Team. (2026). Federal Funds Rate History. Swoopr Investment. https://www.getswoopr.com/tables/bonds/fed-funds-rate-history/
Check the figures against the primary sources listed under References before you rely on or republish them; the series they come from are revised.