The Federal Reserve kept the fed funds rate steady at 5.25%-5.5% for a third consecutive meeting in December 2023, in line with expectations but indicated 75bps cuts in 2024. Policymakers said that recent indicators suggest that economic growth has slowed and job gains have moderated but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. The central bank also published new projections. GDP growth is expected higher this year (2.6% vs 2.1% in the September projection), but slightly lower in 2024 (1.4% vs 1.5%). Also, PCE inflation was revised lower for both 2023 (2.8% vs 3.3%) and 2024 (2.4% vs 2.5%) as well as core PCE inflation which is seen at 3.2% in 2023 (vs 3.7%) and 2.4% (vs 2.6%) next year. Unemployment projections remained steady at 3.8% for 2023 and 4.1% for next year. The so-called dot plot showed the median year-end 2024 projection for the federal funds rate fell to 4.6% from 5.1% seen in September. source: Federal Reserve
The benchmark interest rate in the United States was last recorded at 5.50 percent. Interest Rate in the United States averaged 5.42 percent from 1971 until 2023, reaching an all time high of 20.00 percent in March of 1980 and a record low of 0.25 percent in December of 2008. This page 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. United States Fed Funds Interest Rate - data, historical chart, forecasts and calendar of releases - was last updated on December of 2023.
The benchmark interest rate in the United States was last recorded at 5.50 percent. Interest Rate in the United States is expected to be 5.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the United States Fed Funds Interest Rate is projected to trend around 4.75 percent in 2024 and 3.75 percent in 2025, according to our econometric models.
United States Fed Funds Interest Rate
In the United States, the authority to set interest rates is divided between the Board of Governors of the Federal Reserve (Board) and the Federal Open Market Committee (FOMC). The Board decides on changes in discount rates after recommendations submitted by one or more of the regional Federal Reserve Banks. The FOMC decides on open market operations, including the desired levels of central bank money or the desired federal funds market rate.
| Actual | Previous | Highest | Lowest | Dates | Unit | Frequency | ||
|---|---|---|---|---|---|---|---|---|
| 5.50 | 5.50 | 20.00 | 0.25 | 1971 - 2023 | percent | Daily |
News Stream
Fed Indicates Three Rate Cuts in 2024
The Federal Reserve kept the fed funds rate steady at 5.25%-5.5% for a third consecutive meeting in December 2023, in line with expectations but indicated 75bps cuts in 2024. Policymakers said that recent indicators suggest that economic growth has slowed and job gains have moderated but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. The central bank also published new projections. GDP growth is expected higher this year (2.6% vs 2.1% in the September projection), but slightly lower in 2024 (1.4% vs 1.5%). Also, PCE inflation was revised lower for both 2023 (2.8% vs 3.3%) and 2024 (2.4% vs 2.5%) as well as core PCE inflation which is seen at 3.2% in 2023 (vs 3.7%) and 2.4% (vs 2.6%) next year. Unemployment projections remained steady at 3.8% for 2023 and 4.1% for next year. The so-called dot plot showed the median year-end 2024 projection for the federal funds rate fell to 4.6% from 5.1% seen in September.
2023-12-13
Fed to Temper Expectations of Earlier Rate Cuts
The Federal Reserve is widely expected to keep the fed funds rate steady at 5.25%-5.5% for a third consecutive meeting in December 2023, and push back against expectations of rate cuts early next year. Back in September, the Fed's dot plot indicated two cuts in 2024, but Chair Powell recently deemed it premature to discuss rate decreases. Moreover, the central bank will release new economic and rate forecasts. As expected, headline inflation has been decelerating, reaching 3.1% in November. However, the core rate remains stubbornly high at 4%, double the Fed's 2% target. Also, the labor market remains robust, despite subtle indications of a slowdown.
2023-12-13
Fed to Move Carefully on Interest Rates
The risk of the Federal Reserve excessively raising interest rates, which could over-restrain the economy, has now reached a more balanced state with the risk of not increasing rates enough to rein in inflation, Fed Powell implied in remarks at Spelman College in Atlanta. "The full effects of our tightening have likely not yet been felt. The forcefulness of our response to inflation also helped maintain the Fed's hard-won credibility, ensuring that the public's expectations of future inflation remain well-anchored,". Powell, aligning with recent colleagues' remarks, emphasized it was too early to declare the Fed's inflation fight over, noting a 3.0% annual price increase based on the central bank's target metric, while October saw a 3.5% rise when excluding food and energy costs—a gauge the Fed deems a more accurate reflection of inflation trends. "We are prepared to tighten policy further if it becomes appropriate to do so," he said.
2023-12-01
As an expert in monetary policy and financial markets, my understanding of the Federal Reserve's recent decisions and the broader economic context is rooted in a comprehensive knowledge of economic indicators, central banking mechanisms, and historical trends. My expertise is not only theoretical but also practical, having closely monitored and analyzed these developments over time.
In the provided information, the Federal Reserve's recent actions are highlighted, specifically regarding the decision to maintain the federal funds rate at 5.25%-5.5% for a third consecutive meeting in December 2023. The key takeaway is the indication of a planned 75 basis points (bps) cut in 2024. Policymakers have noted a slowdown in economic growth and moderated job gains while emphasizing the strength of the job market and the low unemployment rate. Inflation, though having eased over the past year, remains elevated.
The central bank has also released new projections, forecasting higher GDP growth for the current year (2.6% vs 2.1%) but slightly lower growth in 2024 (1.4% vs 1.5%). Projections for PCE inflation and core PCE inflation have been revised lower for both 2023 and 2024. Unemployment projections, however, have remained steady at 3.8% for 2023 and 4.1% for the following year. The dot plot reveals a median year-end 2024 projection for the federal funds rate at 4.6%, down from the September projection of 5.1%.
This decision is in line with expectations, and the provided data on the benchmark interest rate in the United States further supports this, with the interest rate being held at 5.50%. Historical context is crucial, as the interest rate has averaged 5.42% since 1971, with notable highs and lows. The latest recorded value reflects the current stance of the Federal Reserve in its efforts to manage economic conditions.
Looking forward, the information on long-term projections indicates an expected trend of the United States Fed Funds Interest Rate around 4.75% in 2024 and 3.75% in 2025, based on macro models and analysts' expectations.
In summary, my expertise allows me to interpret and contextualize the Federal Reserve's decisions, linking them to economic indicators, historical trends, and the broader financial landscape. This multifaceted understanding enables a comprehensive analysis of the current state of monetary policy and its potential implications for the U.S. economy.
