Fed Funds Rate History with Its Highs, Lows, and Charts

How Fed Rate Changes Have Changed Through History

Image shows a woman sitting at a computer looking at a graph of the fend funds rate. Text reads: "The highest and lowers fed funds rate: highest fed funds rate: 20%, it was raised to combat double-digit inflation in 1979 and 1980. Lowest fed funds rate: 0.25%, it was lowered in december 2008 in response to the great recession"
Image by Maddy Price © The Balance 2019

The Federal Reserve prefers to keep the fed funds rate in a 2% to 5% sweet spot that maintains a healthy economy. In this range, the nation's gross domestic product grows between 2% and 3% annually, and the natural unemployment rate is between 4.5% and 5%. Price increases remain below the Fed's inflation target of a 2% core rate. The fed funds rate was 1.75% as of October 30, 2019.

There were times in history when the nation's benchmark interest rate was well above this sweet spot to curb runaway inflation. Between 2008 and 2015, it was well below the target to stimulate economic growth. Once you see how the Fed changed the fed funds rate, you will understand how it managed both inflation and recession.

Highest Fed Funds Rate

The fed funds rate reached a high of 20% in 1979 and 1980 to combat double-digit inflation. The inflation began in 1973 after President Richard Nixon disengaged the dollar from the gold standard. Inflation tripled from 3.9% to 9.6%. The Fed doubled interest rates from 5.75% to a high of 11%. Inflation continued to remain in the double digits through all of 1974. It lasted until April 1975. The Fed kept raising the fed funds rate to a peak of 13% in July 1974. It dramatically lowered the rate to 7.5% in January 1975.

These sudden changes, known as stop-go monetary policy, confused businesses. They kept prices high to stay ahead of the Fed's interest rate spikes. That only made inflation worse. Fed leaders learned that managing inflation expectations was a critical factor in controlling inflation itself.

In 1979, Federal Reserve chair Paul Volcker ended the Fed's stop-go policy. He raised rates and kept them there to finally end inflation. That created the 1980 recession but thoroughly ended double-digit inflation. It hasn't been a threat since.

Lowest Fed Funds Rate

The all-time low was 0.25%. That's effectively zero. The Fed lowered it to this level on December 17, 2008. It was the 10th rate cut in a little more than a year. The Fed didn't resume raising rates until December 2015

Before this, the lowest fed funds rate was 1% in 2003 to combat the 2001 recession. At the time, there were fears that the economy was drifting toward deflation.

Fed Funds Rate History

The charts below show the targeted fed funds rate changes since 1971. Until October 1979, the Federal Open Market Committee didn't announce its target interest rate after meetings. The target rate was inferred by an archived chart published by the Federal Reserve Bank of New York. The bank adjusted the rate through open market operations. As a result, the rates changed gradually, even in between meetings. Businesses were forced to guess what the rates would be. The Fed tried to fight inflation without managing the expectations of inflation.

In 1979, the Fed began targeting the money supply to fight inflation. As a result, the fed funds rate fluctuated a great deal between 1979 and 1982. In 1982, the Fed returned to targeting the fed funds rate specifically.

In February 1994, the FOMC formally announced its policy changes for the first time. Since then, its announcements make it clear what it wants the interest rate to be. This manages expectations of inflation. It minimizes disruptions caused by surprises from the Fed.

The Federal Reserve Bank of St. Louis publishes a complete history of the effective fed funds rate since 1954. The Fed also has transcripts of all meetings since 1936.

Fed Chair: Arthur Burns January 1970—March 1978

1971: GDP = 3.3%, Unemployment = 6.0%, Inflation = 3.3%

Date Fed Funds Rate Event
Jan 12 4.25% Expansion
Feb 9 3.75% Expansion
Mar 9 5.0% Inflation at 4.4% year-over-year
Jul 27 5.5% Nixon shock; Weakened gold standardTariffs
Aug 24 5.75% Wage-price controls
Oct 19 5.25% Fed lowered rate to boost growth
Nov 16 5.0% Fed lowered rate to boost growth

1972: GDP = 5.3%, Unemployment = 5.2%, Inflation = 3.4%

Mar 21 5.5% Nixon devalued dollar, creating inflation
Dec 19 5.75% Fed raised rate to combat 3.5% YOY inflation

1973: GDP = 5.6%, Unemployment = 4.9%, Inflation = 8.7% 

Jan 16 6.0% Fed raised rates to combat 3.6% inflation
Feb 13 6.5% Fed raised rates to combat 3.6% inflation
Mar 20 7.0 Fed raised rates to combat 3.6% inflation
Apr 17 7.25% Inflation at 5.1%
May 15 7.5% - 7.75% Inflation at 5.5%
Jun 19 8.5% Inflation at 6.0%
Jul 17 10.25% Inflation at 6.0%
Aug 21 11.0% OPEC embargo worsened inflation in October

1974: GDP = -0.5%, Unemployment = 7.2%, Inflation = 12.3%

Feb 20 9.0% Recession had begun in November 1973
Mar 18 10.0% Embargo ended in March
Apr 16 11.0% Fed raised rates to stop inflation
Jul 16 13.0% Inflation at 11.5%, Ford replaced Nixon in August
Nov 19 9.25% Fed lowered rates to end recession despite 12% YOY inflation
Dec 17 8.0% Fed lowered rates to end recession despite 12% YOY inflation

1975: GDP = -0.2%, Unemployment = 8.2%, Inflation = 6.9%

Jan 21 7.0% Stagflation
Feb 19 6.0% Economy contracted 4.8% in first quarter with inflation at 11.2%
Mar 18 5.75% Recession ended
Apr 15 5.25% Inflation at 10.2%
Jun 17 6.25% Inflation at 9.2%
Sep 16 6.5% Inflation falls to 7.9%

1976: GDP = 5.4%, Unemployment = 7.8%, Inflation = 4.9%

Jan 20 4.75% Rate lowered from October through January
May 18 5.5% Raised in April and May
Oct 19 5.0% Official end of gold standard
Nov 16 4.75% Lowered from July–November

1977: GDP = 4.6%, Unemployment = 6.4%, Inflation = 6.7%

Aug 16 6.0% Inflation rises to 7% in April
Sep 10 6.25% Inflation at 6.4%
Oct 18 6.5% Raised again in September and October

Fed Chair William Miller (March 1978—August 1979)

1978: GDP = 5.5%, Unemployment = 6.0%, Inflation = 9.0%

Jan 17 6.75% Inflation rises to 6.8%
Apr 18 7.0%  
May 16 7.5%  
Jun 20 7.75%  
Aug 15 8.0% Inflation rises to 7.9%
Sep 19 8.5%  
Oct 17 9.0% Inflation at 8.9%
Nov 21 9.75%  
Dec 19 10.0% Raised each month from April through December

Fed Chair Paul Volcker (August 1979—August 1987)

1979: GDP = 3.2%, Unemployment = 6.0%, Inflation = 13.3% 

Apr 17 10.25% Inflation at 10.5%
Jul 11 10.5%  
Aug 14 11.0%  
Sep 18 11.5% Inflation rises to 11.9%
Oct 6 13.0% The Fed began targeting the money supply
Oct 22 15.5% Conference call raised rates 2.5 points
Nov 20 14.0% Inflation at 12.6%

1980: GDP = -0.3%, Unemployment = 7.2%, Inflation = 12.5%

Feb 5 15.0% Recession began in January, Inflation at 14.6%
Mar 18 20.0%  
May 20 11.5% Conference calls on April 29 and May 6 lowered rates
Jun 5 8.5% Recession ends in July
Aug 12 10.0% Raised rates back up, Inflation at 12.9%
Sep 16 11.0%  
Oct 21 12.0%  
Nov 18 18.0% Inflation eases to 12.6%
Dec 12 20.0% Conference call
Dec 19 18.0% Lowered two points

1981: GDP = 2.5%, Unemployment = 8.5%, Inflation = 8.9%

Feb 3 20.0% Reagan took office; Volcker raised rates again
Apr 28 16.0% Conference call lowered rates
May 18 20.0% Recession began in July
Nov 17 13.0% Gradually lowered rates over 6 months
Dec 22 12.0% Inflation at 8.9%

1982: GDP = -1.8%, Unemployment = 10.8%, Inflation = 3.8%

Mar 30 15.0% Gradually raised rates 3 points over 4 months
Jul 15 13.0% Conference call; Gradually lowered rates
Aug 24 9.5% Gradually lowered rates
Nov 16 9.0% Recession ends
Dec 21 8.5% Inflation at 3.8%

1983: GDP = 4.6%, Unemployment = 8.3%, Inflation = 3.8%

May 2 49.5% Gradually raised rates over 5 months
Aug 23 9.66% Raised from May to August
Oct 4 9.25% Lowered from August to October

1984: GDP = 7.2%, Unemployment = 7.3%, Inflation = 3.9%

Mar 27 10.5% Raised rates again
Jul 17 11.5%.  
Aug 21 11.75% Raised from March to August
Oct 2 10% Began lowering again
Nov 7 9.5%  
Dec 18 8.25% Lowered from September to December

1985: GDP = 4.2%, Unemployment = 7.0%, Inflation = 3.8%

Mar 26 9.0% Raised from February to mid-March
May 21 7.75% Began lowering again
Aug 20 8.0% Raised again
Dec 17 7.75% Lowered again

1986: GDP = 3.5%, Unemployment = 6.6%, Inflation = 1.1%

Apr 1 6.75% Continued lowering rates
Aug 19 5.66% Lowered until August
Dec 16 6.0% Began raising rates again

Fed Chair Alan Greenspan (August 1987—January 2006)

1987: GDP = 3.5%, Unemployment = 5.7%, Inflation = 4.4%  

May 19 6.75% Continued raising rates to fight inflation
Sept 22 7.25% Continued raising rates to fight inflation
Oct 19 6.75% Lowered after Black Monday stock market crash

1988 : GDP = 4.2%, Unemployment = 5.3%, Inflation = 4.4%

Feb 10 6.5% Continued lowering
Mar 29 7.5% Began raising to fight inflation
Aug 16 8.25% Began raising to fight inflation
Dec 9.75% Began raising to fight inflation

1989: GDP = 3.7%, Unemployment = 5.4%, Inflation = 4.6%

Dec

8.25% S&L crisisFed lowered rates to calm markets.

1990: GDP = 1.9%, Unemployment = 6.3%, Inflation = 6.1%

Jul 13 8.0% Recession began in July
Oct 29 7.75% Continued lowering rates to boost economy despite inflation
Nov 13 7.5% Continued lowering rates to boost economy despite inflation
Dec 7 7.25% Conference call
Dec 18 7.0% Economy contracted 3.6% in Q4

1991: GDP = -0.1%, Unemployment = 7.3%, Inflation = 3.1%

Jan 9 6.75% Economy contracted 1.9%
Feb 1 6.25%  
Mar 8 6.0% Recession ended
Apr 30 5.75% Conference call
Aug 6 5.5%  
Sep 13 5.25% Conference call
Oct 31 5.0% Conference call
Nov 6 4.75% Fed continued lowering rates to fight unemployment
Dec 6 4.5% Fed continued lowering rates to fight unemployment
Dec 20 4.0% Fed continued lowering rates to fight unemployment

1992: GDP = 3.5%, Unemployment = 7.4%, Inflation = 2.9%

Apr 3.75% Fed lowered rates to fight unemployment
Jul 1 3.25% Fed lowered rates to fight unemployment
Aug 18 3.0% Fed lowered rates to fight unemployment

1993: GDP = 2.8%, Unemployment = 5.5%, Inflation = 2.7%. 

  • Clinton took office in 1993. Fed made no changes.

1994: GDP = 4.0%, Unemployment = 5.5%, Inflation = 2.7%

Feb 4

3.25% Fed raised rates to keep economy healthy
Mar 22 3.5%  
Apr 18 3.75% Conference call
May 17 4.25%  
Aug 16 4.75%  
Nov 15 5.5% Raised rates

1995: GDP = 2.7%, Unemployment = 5.6%, Inflation = 2.5%

Feb 1 6.0% Raised rates
Jul 6 5.75% Lowered rates
Dec 19 5.5%  

1996: GDP = 3.8%, Unemployment = 5.4%, Inflation = 3.3%

Jan 31 5.25% Kept rates low despite inflation

1997: GDP = 4.4%, Unemployment = 4.7%, Inflation = 1.7% 

Mar 25 5.5% Raised rates despite low inflation

1998: GDP = 4.5%, Unemployment = 6%, Inflation = 1.6%

Sep 29 5.25% Lowered rates to fight LTCM crisis
Oct 15 5.0%  
Nov 17 4.75%  

1999: GDP = 4.8%, Unemployment = 6%, Inflation = 2.7%

Jun 30 5.0% Raised rates since economy was doing well
Aug 24 5.25%  
Nov 16 5.5%  

2000: GDP = 4.1%, Unemployment = 6%, Inflation = 3.4%

Feb 2 5.75% Raised rates despite stock market decline in March
Mar 21 6.0% Raised rates despite stock market decline in March
May 16 6.5% Raised rates despite stock market decline in March

2001: GDP = 1.0%, Unemployment = 6%, Inflation = 1.6%

Jan 3 6.0% Bush took office
Jan 31 5.5% Bush took office
Mar 20 5.0% Recession began; Fed lowered rates to fight it
Apr 18 4.5% Recession began; Fed lowered rates to fight it
May 15 4.0%^ Recession began; Fed lowered rates to fight it
Jun 27 3.75% EGTTRA tax rebate enacted
Aug 21 3.5%  
Sep 17 3.0% 9/11 attacks
Oct 2 2.5% Afghanistan War
Nov 6 2.0% Recession ended
Dec 11 1.75%  

2002: GDP = 1.7%, Unemployment = 6%, Inflation = 2.4%

Nov 6 1.25% Fed lowered rates to fight sluggish growth

2003: GDP = 2.9%, Unemployment = 6%, Inflation = 1.9%

Jun 25 1.00% JGTRRA tax cuts enacted to spur growth.

2004: GDP = 3.8%, Unemployment = 6%, Inflation = 3.3%

Jun 30 1.25% Low rates pushed interest-only loans
Aug 10 1.5% Helped cause Subprime Mortgage Crisis
Sep 21 1.75% Helped cause Subprime Mortgage Crisis
Nov 10 2.0% Helped cause Subprime Mortgage Crisis
Dec 14 2.25% Helped cause Subprime Mortgage Crisis

2005: GDP = 3.5%, Unemployment = 6%, Inflation = 3.4%

Feb 2 2.5% Hurt borrowers of adjustable loans when rates reset in 3rd year
Mar 22 2.75% Hurt borrowers of adjustable loans when rates reset in 3rd year
May 3 3.0% Hurt borrowers of adjustable loans when rates reset in 3rd year
Jun 30 3.25%  
Aug 9 3.5%  
Sep 20 3.75%  
Nov 1 4.0%  
Dec 13 4.25%  

Fed Chair Ben Bernanke (February 2006—January 2014)

2006: GDP = 2.9%, Unemployment = 6%, Inflation = 2.5% 

Jan 31 4.5% Raised to cool housing market bubble; More homeowners default
Mar 28 4.75% Raised to cool housing market bubble; More homeowners default
May 10 5.0% Raised to cool housing market bubble; More homeowners default
Jun 29 5.25% Raised to cool housing market bubble; More homeowners default

2007: GDP = 1.9%, Unemployment = 6%, Inflation = 4.1%

Sep 18 4.75% Home sales fell
Oct 31 4.5%  
Dec 11 4.25% LIBOR rose; Stock market peaked; Recession began

2008: GDP = -0.1%, Unemployment = 6%, Inflation = 0.1%

Jan 22 3.5%  
Jan 30 3.0% Tax rebate
Mar 18 2.25% Bear Stearns bailout
Apr 30 2.0% Lehman fails; Bank bailout approved; AIG bailout
Oct 8 1.5% Lehman fails; Bank bailout approved; AIG bailout
Oct 29 1.0% Lehman fails; Bank bailout approved; AIG bailout
Dec 16 0.25% Effectively zero; Lowest fed fund rates possible

Between 2008 and 2015, the Fed kept the rate at zero. The recession ended in June 2009.

Fed Chair Janet Yellen (February 2014—February 2018)

2015: GDP = 2.9%, Unemployment = 6%, Inflation = 0.7% 

Dec 17 .0.5% Growth stabilized so Fed began raising rates

2016: GDP = 1.6%, Unemployment = 4.6%, Inflation = 2.1% 

Dec 15 0.75% Fed maintained steady increase in rates

2017: GDP = 2.4%, Unemployment = 4.1%, Inflation = 2.1%

Mar 16 1.0% Fed was steady on its path of normalizing its benchmark rate
Jun 15 1.25% Fed was steady on its path of normalizing its benchmark rate
Dec 14 1.5% Fed was steady on its path of normalizing its benchmark rate

Fed Chair Jerome Powell (Since February 2018)

2018: GDP = 2.9%, Unemployment = 3.9%, Inflation = 1.9%

Mar 22 1.75% Fed projects steady growth
Jun 14 2.0% Fed projects steady growth
Sep 27 2.25% Fed projects steady growth
Dec 19 2.5% Fed promised to stop raising rates

2019: Q3 GDP = 1.9%, Sep Unemployment = 3.5%, Sep Inflation = 1.7%

Jul 31 2.25% Fed lowered rate despite steady growth
Sep 18 2.0% Fed was concerned about slowing growth.
Oct 30 1.75% Slow global growth and muted inflation.