Annual fed funds effective rate in the U.S. 1990-2026

Federal funds rate level in the United States from 1990 to 2026

The federal funds effective rate is the actual market interest rate at which US banks lend reserves to each other overnight, and it is the single most important rate in American finance. Measured as an annual average, it has swung from about 8.1 percent in 1990 to near zero after 2008 and again in 2021, before a sharp climb above 5 percent in 2023. Because it is the rate banks actually pay each other rather than a target, the effective rate is the truest measure of the price of money in the United States, and every other interest rate, from mortgages to credit cards, is built on top of it. Unlike a target range, which is a policy choice, the effective rate is a market outcome, the volume-weighted median of actual overnight loans between banks, which is why economists treat it as the definitive measure of the stance of monetary policy.

The Federal Reserve steers this rate toward its target range, so its path is a clean record of US monetary policy across more than three decades. The series sits alongside our primary credit rate overview and our federal funds rate coverage.

Three decades in one line: the federal funds rate averaged 8.1 percent in 1990, fell to near zero after 2008 and again in 2021, surged above 5 percent in 2023, and sits near 3.6 percent in 2026.

From the high rates of the early 1990s through the dot-com bust, the financial crisis, the zero-rate decade and the inflation shock of the 2020s, the rate traces every major turn, themes our central banks and short-term interest rates worldwide overviews explore.

A note on the data. The figures are annual averages of the federal funds effective rate from the Federal Reserve, shown in percent. The 2026 figure is a partial-year average as of June 2026, and the rate can change at any meeting of the Federal Open Market Committee. The effective rate can differ slightly from the midpoint of the target range because it is set by actual trading among banks, but the Federal Reserve uses several tools, including interest on reserve balances, to keep it close to where it wants it. All figures are annual averages and so smooth over the sharp moves that can happen within a single year, which is why a year like 2008, when the rate fell from above 4 percent to near zero, shows an annual average of close to 2 percent.

The Fed Funds Rate, Year by Year

The table lists the federal funds effective rate as an annual average for selected years from 1990 to 2026. It shows the scale of the swings, from the 8 percent levels of the early 1990s to the near-zero readings of the 2010s and the recent return above 5 percent. Setting the rate and inflation side by side in the table reveals how closely the two move, with the high rates of the early 1990s matching high inflation, the near-zero rates of the 2010s matching very low inflation, and the 2023 spike matching the worst inflation in forty years. Because the table shows annual averages, the within-year drama is hidden, so the 2008 reading of 1.92 percent masks a collapse from above 4 percent to near zero over the course of that single crisis year.

The Fed Funds Rate Under Each Fed Chair

Averaged by Federal Reserve Chair, the rate tells a clear story of changing eras. It averaged about 4.3 percent under Alan Greenspan, around 1.6 percent under Ben Bernanke, just 0.4 percent under Janet Yellen, and about 2.5 percent under Jerome Powell. The pattern reflects the economy each Chair inherited, with Greenspan presiding over the high-rate 1990s and early 2000s, Bernanke and Yellen managing the long zero-rate aftermath of the 2008 crisis, and Powell steering both the pandemic cut and the steepest tightening in four decades. The Greenspan years alone spanned an enormous range, from the 8 percent rates of 1990 down to the 1 percent of 2003, showing how even a single Chair can preside over wildly different rate environments as the economy moves through boom and bust.

The very low averages under Bernanke and Yellen reflect the years of near-zero rates after the 2008 crisis, while the higher Greenspan and Powell figures span both booms and busts, a contrast our financial markets in the US coverage reflects.

Each era in one number: the rate averaged about 4.3 percent under Greenspan, 1.6 percent under Bernanke, 0.4 percent under Yellen and 2.5 percent under Powell, tracing the shift from high rates to near zero and back.

Each Chair inherited and shaped a different economy, from the strong growth of the 1990s to the long recovery of the 2010s and the inflation fight of the 2020s. The average rate under each is a quick gauge of the conditions they faced. Reading the averages in sequence is almost a history of the period in itself, tracing the path from the inflation-fighting credibility built in the 1990s, through the emergency policies of the crisis years, to the renewed inflation battle of the 2020s. The figures also show how unusual Jerome Powell tenure was, beginning with gradual hikes, swinging to an emergency cut in 2020, and then delivering the most aggressive tightening since the early 1980s, a fuller range of conditions than almost any predecessor faced.

Which Decade Had the Highest Rates?

The highest rates of the whole period came in the 1990s, when the annual average peaked at 8.1 percent in 1990, while the lowest came in the 2010s and 2020s, when it fell as low as 0.08 percent. Each decade has had its own range. The widening then collapsing range across the decades captures the central drama of modern monetary policy, with rates that once moved within a band of a few points above 3 percent eventually falling all the way to zero and staying there for years. Grouping the years by decade rather than reading them one by one reveals the slow structural decline in rates over the period, with each decade tending to peak lower than the one before until the inflation shock of the 2020s briefly broke the pattern.

The 2000s spanned the widest range of all, from a peak above 6 percent in 2000 to a low of 0.16 percent in 2009, capturing both the dot-com boom and the financial crisis, swings our developed and emerging share price index overview also tracks.

Ranges that collapsed: the 1990s never saw rates below 3 percent, the 2010s never above 2.2 percent, and the 2000s spanned the widest range of all, from above 6 percent in 2000 to near zero in 2009.

The contrast between decades is stark. The 1990s never saw rates below 3 percent, while the 2010s never saw them above 2.2 percent, a reminder of how completely the interest-rate environment changed after the 2008 crisis. This decade-by-decade view makes plain that the 2010s were the true outlier, the only decade in modern history in which the rate never once rose above a couple of percent, a direct legacy of the depth of the 2008 financial crisis. The structural decline across decades is one of the most studied trends in modern economics, and whether the 2020s mark a permanent break from it or merely a temporary interruption remains an open and consequential question.

Every Major Rate Cycle Since 1990

Across the major rate cycles since 1990, the federal funds rate has repeatedly climbed and fallen by several percentage points. The largest single climb was the 2022 to 2023 cycle, which lifted the rate from near zero to above 5 percent in about eighteen months. Each cycle reflects the dominant shock of its time, from the dot-com bust and the housing crash to the pandemic and the post-pandemic inflation, with the rate covering four, five or even six percentage points of ground in the larger moves. The dumbbell view, showing where each cycle began and ended, captures the full sweep of the rate far better than any single snapshot, revealing both the scale of the climbs during expansions and the depth of the cuts during recessions.

The deepest cuts came in 2001 after the dot-com bust, in 2008 during the financial crisis, and in 2020 during the pandemic, each time taking the rate down by several points, swings our global financial markets overview helps frame.

Slow up, fast down: each cycle shows the rate climbing gradually during expansions and falling sharply in the 2001, 2008 and 2020 downturns, with the 2022 to 2023 surge the steepest climb in four decades.

The pattern of gradual hikes and rapid cuts repeats across cycles, reflecting how the Federal Reserve tightens cautiously to avoid choking growth but loosens quickly once a recession or crisis takes hold. The repeated rhythm of slow climbs and fast falls reflects the asymmetry at the heart of monetary policy, where central banks raise rates carefully to avoid choking growth but cut them aggressively the moment a downturn or crisis is clearly under way.

When the Fed Raised and Cut Rates

Year-to-year changes show the Federal Reserve raised the rate in steady steps and cut it in sharp drops. The biggest single-year rise was about 3.35 points in 2023, while the steepest fall was about 3.1 points in 2008. The contrast between long flat stretches and sudden bursts of change is the defining feature of the annual record, showing how the Federal Reserve tends to wait and watch before acting decisively when inflation or a crisis finally forces its hand. Translating the smooth rate line into annual changes turns it into a series of discrete policy decisions, each the product of an FOMC meeting weighing inflation, employment and financial conditions before settling on whether to raise, cut or hold.

Long stretches of almost no change, especially from 2010 to 2015, sit between the bursts of action, underlining how central banks prefer to hold steady and then move decisively, a pattern our Nasdaq stock market coverage reflects.

Bursts and pauses: the rate rose in steady annual steps but was cut in sharp drops, with a record 3.35 point jump in 2023 and an equally steep 3.1 point fall in 2008.

The asymmetry is clear once again. Rate rises tend to come in modest annual steps over several years, while cuts arrive fast and deep in response to a crisis, which is why the down moves dominate the chart. This asymmetry between gradual hikes and rapid cuts explains why the largest single-year moves in the record are nearly always cuts, delivered in response to the recessions of the early 1990s and early 2000s, the 2008 crisis and the 2020 pandemic.

How Often Were Rates Near Zero?

For ten of the thirty-seven years since 1990, the federal funds rate averaged below 1 percent, almost all of them after the 2008 crisis. At the other extreme, ten years saw the rate above 5 percent, mostly in the 1990s and early 2000s. The near-even split between high-rate and low-rate years, divided sharply by the 2008 crisis, captures how completely the interest-rate world changed, with a whole generation of borrowers experiencing near-zero rates as the normal state of affairs. Grouping the years by rate band rather than by date offers a different lens, showing not when rates were high or low but for how long, and the answer is that the period was split almost evenly between the two, with the break falling at the 2008 crisis.

The clustering of near-zero years after 2008 marks the most unusual stretch in the modern history of the rate, a decade of cheap money that lifted asset prices in ways our gold as an investment overview describes.

A near-even split: for ten of the thirty-seven years the rate sat below 1 percent, almost all after 2008, while another ten years saw it above 5 percent, mostly in the 1990s and early 2000s.

The distribution shows how the period split almost evenly between high-rate and low-rate eras, with the dividing line falling sharply at the 2008 financial crisis, after which near-zero rates became the norm for years. The sheer number of near-zero years helps explain why the return of higher rates in 2022 felt so jarring, since many borrowers and investors had built their plans around the assumption that money would stay almost free indefinitely.

The Fed Funds Rate and Inflation

The federal funds rate tracks inflation closely, rising when prices surge and falling when they cool. The clearest example is 2022 and 2023, when inflation hit about 8 percent and the Fed raised the rate by more than five points to bring it back down. The link runs through the Federal Reserve dual mandate, as the central bank raises the rate to cool an overheating economy and cuts it to support a weak one, so the federal funds rate effectively rises and falls with the inflation it is trying to control. Because the federal funds rate responds to inflation with a lag, the rate tends to peak shortly after inflation does and to bottom out only once price pressures have clearly faded, which is why the two lines on the chart move together but not perfectly in step.

In the low-inflation 2010s, by contrast, the rate stayed near zero because prices were rising too slowly, and in 2009 it was cut to near zero as inflation briefly turned negative, a dynamic our biggest companies by market value coverage connects to valuations.

The rate follows prices: the federal funds rate tracks inflation closely, surging in 2022 and 2023 as prices hit about 8 percent and sitting near zero through the low-inflation 2010s.

The relationship is not exact, because the Fed also weighs employment and financial stability, but inflation is the dominant driver. When prices run hot, the federal funds rate follows them up, and when they cool, it follows them down. The 2022 to 2023 episode was the clearest test of the relationship in decades, as the fastest inflation in forty years met the fastest tightening in forty years, dragging the federal funds rate from near zero to above 5 percent in about eighteen months. That tight coupling of inflation and the policy rate is exactly what central banking is designed to deliver, and the 2022 to 2023 episode showed the mechanism working at full stretch, with the federal funds rate climbing almost as fast as prices themselves.

What Are the Highest and Lowest Fed Funds Rates?

The highest annual average in this period was 8.1 percent in 1990 and the lowest was 0.08 percent in 2021. Between those extremes sit the turning points that define the modern history of the rate. The distance between the 8.1 percent high of 1990 and the 0.08 percent low of 2021 is more than eight full percentage points, a span that captures the enormous range the rate has covered across these three and a half decades. Each milestone level was set in response to a specific economic moment, so the numbers are deliberate policy choices made at turning points in the United States business cycle rather than arbitrary points on a chart.

Key milestones include the post-dot-com low of 1.13 percent in 2003, the housing-boom peak of about 5 percent in 2007, the crisis low of 0.16 percent in 2009 and the 2023 peak above 5 percent, markers our global stock markets by country coverage helps place globally.

Highs, lows and turning points: from the 8.1 percent high of 1990 to the 1.13 percent post-dot-com low, the 0.16 percent crisis low of 2009 and the 5 percent peak of 2023.

Each milestone marks a moment when the United States economy shifted gears, from boom to recession and from crisis to recovery. The federal funds rate is a clean record of every one of those turns since 1990. Reading the milestones in order is like reading a timeline of the United States economy, with each turning point in the rate corresponding to a recession, a recovery, a crisis or an inflation scare that reshaped the financial landscape.

The Fed Funds Rate Since 2015

Since 2015 the federal funds rate has made its most dramatic moves in a generation, climbing from near zero to about 2.2 percent by 2019, crashing back to near zero in 2020, surging above 5 percent in 2023, and easing to about 3.6 percent by 2026. The speed of the recent swings sets them apart, because where earlier cycles unfolded gradually over several years, the moves since 2019 compressed a near-zero trough, a record-fast climb and the start of a descent into barely six years. The years since 2015 contain both one of the lowest readings on record, at 0.08 percent in 2021, and one of the highest of the modern era, above 5 percent in 2023, which means the extremes of the entire period sit within a single short span.

The pandemic cut, the inflation-driven surge and the careful descent since, including three rate cuts in 2025, have all played out in barely a decade, a compression of the normal cycle our leading financial centres coverage helps frame.

The sharpest swings: since 2015 the rate has climbed to 2.2 percent, crashed to near zero in 2020, surged above 5 percent in 2023 and eased to about 3.6 percent by 2026.

The recent path shows how quickly conditions can change. A rate frozen near zero for years climbed faster than at any time since the 1980s, before easing back as inflation slowly came under control. The lesson of the recent period is that rates can move far faster than many expect, and that long stretches of stability can give way to violent swings once inflation or financial stress forces the Federal Reserve to act with unusual speed.

The Long View: 1990 to 2026

Seen across the full span from 1990 to 2026, the federal funds rate has trended steadily lower, from the 5 to 8 percent levels of the 1990s to a long stretch near zero and then a partial rebound. The long-run direction has been clearly downward. That long downward drift, interrupted only by the recent inflation spike, has shaped a whole era of cheap borrowing, rising asset prices and growing debt, raising the question of whether the world has now permanently left the era of ultra-low rates behind. Each successive cycle peak through the 1990s, 2000s and 2010s came in lower than the one before, a pattern that many economists linked to slower growth, aging populations and a global glut of savings, until the 2022 inflation shock interrupted it.

Each successive peak has been lower than the last, from above 6 percent in 2000 to about 2.4 percent in 2019, before the inflation shock pushed the latest peak back above 5 percent, a break from the trend our largest asset managers coverage reflects.

A downward drift, then a spike: across the full span each cycle peaked lower than the last, from above 6 percent in 2000 to 2.4 percent in 2019, before the inflation shock pushed the latest peak back above 5 percent.

Whether the 2023 peak marks a lasting return to higher rates or a temporary spike in a long downward trend is one of the central questions in finance, with huge implications for borrowing, saving and asset prices. The answer will shape everything from government borrowing costs to house prices and stock valuations, which is why few questions in finance attract as much attention as the future direction of the federal funds rate.

The Fed Funds Rate in Numbers

A few numbers capture the history. The federal funds rate averaged 8.1 percent in 1990, fell to 0.16 percent in 2009 and 0.08 percent in 2021, peaked above 5 percent in 2023, and sits at about 3.6 percent in 2026. These figures together make the federal funds rate the cleanest single gauge of US monetary policy, since it captures in one number whether the Federal Reserve is trying to slow the economy down or speed it up at any given moment. Viewed as a whole, the thirty-seven-year record is a reminder that interest rates are never static, and that the cost of money in the United States has swung through an enormous range as the Federal Reserve has fought booms, busts, crises and inflation in turn.

The rate matters because it anchors the whole financial system, shaping the prime rate, mortgages, loans, savings and the flow of money into riskier assets, a link our crypto market coverage explores.

Together these figures show a rate that has fallen through recessions, hit near zero twice, and surged in the inflation fight of the 2020s, tracing the whole arc of US monetary policy since 1990.

Federal Funds Rate: The Big Picture

Taken together, the federal funds effective rate from 1990 to 2026 is a compact history of the United States economy, from the strong growth of the 1990s through the dot-com bust, the financial crisis, the zero-rate decade and the inflation shock, much of it managed alongside the firms in our asset management coverage.

Whether rates settle near their current level or fall back toward the lows of the 2010s depends on inflation and growth, but the federal funds rate will remain the central lever of US policy and a quiet anchor for the funds in our largest ETFs and leading investment banks overviews.

Frequently Asked Questions: The Federal Funds Rate