Current Fed Funds Rate
Last updated: April 10, 2025
Effective Fed Funds Rate
The actual interest rate at which depository institutions trade federal funds with each other overnight.
Current: 5.33%
Previous: 5.33%
Target Rate Range
The range set by the Federal Open Market Committee (FOMC).
Current Target: 5.25% - 5.50%
Next FOMC Meeting: April 30-May 1, 2025
Prime Rate
The interest rate that commercial banks charge their most creditworthy customers.
Current: 8.50%
Related to Fed Funds Rate: Prime Rate = Fed Funds Rate + 3%
Historical Fed Funds Rate Chart
What is the Fed Funds Rate?
The federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. The Federal Open Market Committee (FOMC), which is the monetary policy-making body of the Federal Reserve System, sets a target for the federal funds rate as part of its monetary policy.
Changes in the fed funds rate can affect the broader economy:
- Higher rates tend to slow economic growth and combat inflation
- Lower rates stimulate economic growth but may increase inflation
- The rate influences other interest rates including mortgages, loans, and savings rates
The Fed Funds Rate is one of the most influential interest rates in the U.S. economy, affecting everything from consumer loans to mortgages, savings accounts, and the overall economic health.
Fed Funds Rate Forecast
Market expectations for future Fed Funds Rate movements based on Fed projections and market indicators:
Next 3 months: The Federal Reserve is expected to maintain the current Fed Funds Rate range, with a 75% probability of no change at the next meeting.
6-month outlook: Markets are pricing in a 60% probability of at least one rate cut in the second half of 2025, as inflation continues to moderate.
1-year projection: Analysts forecast the Fed Funds Rate to be in the range of 4.75% - 5.25% by April 2026, reflecting expectations of gradual easing.