Fed Funds Rate History: Highs, Lows and Chart With Major Events

What Makes the Fed Change Rates?

Past Federal Reserve Chairs
Federal Reserve Vice Chairman Janet Yellen, former Federal Reserve Board Chairman Paul Volker, former Federal Reserve Board Chairman Alan Greenspan and current Chairman Ben Bernanke, listen to remarks during the Federal Reserve centennial commemoration at the Federal Reserve building, on December 16, 2013 in Washington, DC. Photo: Mark Wilson/Getty Images

What Was the Historical Fed Funds Rate?

The Federal Reserve prefers to keep the fed funds rate between 2 and 5 percent. It's the sweet spot that maintains a healthy economy. That's where the nation's gross domestic product grows between 2 percent and 3 percent annually. It has a natural unemployment rate between 4.7 percent and 5.8 percent​. Price increases remain below the Fed's inflation target of a 2 percent core inflation rate.

 Find out the current fed funds rate.

But there were times in history where the nation's benchmark interest rate was well above its sweet spot. That was to curb runaway inflation. Since 2008, it's been well below to stimulate economic growth. Once you see how the Fed changed the fed funds rate, you will understand how it manages inflation and recession

What Was the Highest Fed Funds Rate?

The fed funds rate reached a high of 20 points in 1979 and 1980. That was to combat double-digit inflation. 

In 1973, inflation tripled, from 3.9 percent to 9.6 percent. The Fed only doubled interest rates from 5.75 to a high of 11 points. Inflation continued to remain in the double-digits through all of 1974, lasting until April 1975. The Fed kept raising the fed funds rate to a peak of 13 in July 1974, and then dramatically lowered the rate, reaching 7.5 by 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.

What Was the Lowest Fed Funds Rate?

The all-time low was 0.25 percent. That's effectively zero.

The Fed lowered it to this level on December 17, 2008, the 10th rate cut in a little over a year. It didn't raise rates until December 2015

Before this, the lowest fed funds rate was 1.0 percent in 2003, to combat the 2001 recession. At the time, there were fears that the economy was drifting towards deflation.

Fed Funds Rate History

This chart shows the fed funds rate changes since 1971. Its complete history from 1954 to the present is found at the Federal Reserve Bank of St. Louis.

DateFed Funds Rate Event
Fed Chair Arthur Burns (January 1970 - March 1978)
1971: GDP = 3.3%, Unemployment = 6.0%, Inflation = 3.3% 
Jan4.5% - 4.0%Expansion.
Feb3.5%
Jul5.5%Fed raised rate to fight inflation.
Aug5.75%Wage-price controls.
Nov5.0%Lowered rate to stimulate growth. 
1972: GDP = 5.2%, Unemployment = 5.2%, Inflation = 3.4% 
Mar5.5%Raised rate to combat inflation. Confused markets.
Dec5.75%
1973: GDP = 5.6%, Unemployment = 4.9%, Inflation = 8.7% 
Jan6.0%Raised four times that month.
Feb6.75%Lowered to 6.5%, then raised to 6.75%.
Apr7.25%Raised for next five months.
Aug11.0%OPEC embargo created inflation in October.
1974: GDP = -0.5%, Unemployment = 7.2%, Inflation = 12.3% 
Feb9% 
Jul13%Raised from March to mid-July.
Dec8.0%Lowered gradually from July to December.
1975: GDP = -0.2%, Unemployment = 8.2%, Inflation = 6.9%
Jan6.5%Lowered four times in January.
May5.0%Lowered five times in five months.
Sep6.5%Raised from June through September.
1976: GDP = 5.4%, Unemployment = 7.8%%, Inflation = 4.9%
Jan4.75%Lowered from October through January.
Apr5.5%Raised in April and May.
Nov4.75%Lowered from July - November.
1977: GDP = 4.6%, Unemployment = 6.4%, Inflation = 6.7%
Aug6.0%Raised from December through August
Oct6.5%Raised again in September and October.
Fed Chair William Miller (March 1978 - August 1979)
1978: GDP = 5.6%, Unemployment = 6.0%, Inflation = 9.0%
Jan6.75% 
Dec10.0%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% 
Apr10.25% 
Oct15.5%Raised rates 4 points.
Dec12.0%Gradual decline through the month.
1980: GDP = -0.2%, Unemployment = 7.2%, Inflation = 12.5%
Jan14.0%Increased rapidly that month.
Mar20.0%Raised rates in February and March.
Jun8.5%Lowered to 9.5% in May and 8.5% in June. 
Sep12.0%Rates increased to 10.0% in August and 12.0% in September
Dec20.0%Raised steadily until mid-December.
Dec 2918.0%Lowered two points.
1981: GDP = 2.6%, Unemployment = 8.5%, Inflation = 8.9%
Jan20.0%Reagan took office. Volcker raised rates again.
Apr16.0%Lowered 4 points.
May20.0%Raised 4 points.
Dec12%Lowered 8 points.
1982: GDP = -1.9%, Unemployment = 10.8%, Inflation = 3.8%
Apr15.0%Raised 3 points.
Dec8.5%Lowered nine times over nine months.
1983: GDP = 4.6%, Unemployment = 8.3%, Inflation = 3.8%
Aug9.66%Raised from May to August.
Oct9.25%Lowered from August to October
1984: GDP = 7.3%, Unemployment = 7.3%, Inflation = 3.9%
Aug11.75%Raised from March to August.
Dec8.25%Lowered from September to December.
1985: GDP = 4.2%, Unemployment = 7.0%, Inflation = 3.8%
Mar9.0%Raised from February to mid-March.
Dec7.75%Lowered from April to December.
1986: GDP = 3.5%, Unemployment = 6.6%, Inflation = 1.1%
Aug5.66%Lowered from March to August.
Dec6.0% 
Fed Chair Alan Greenspan (August 1987 - January 2006)
1987: GDP = 3.5%, Unemployment = 5.7%, Inflation = 4.4%  
Sep7.25%Raised rates from April to September.
Nov6.75%Lowered after October 19 stock market crash.
1988: GDP = 4.2%, Unemployment = 5.3%, Inflation = 4.4%
Feb6.5%Lowered in January and February.
Dec9.75%Raised rates to fight inflation.
1989: GDP = 3.7%, Unemployment = 5.4%, Inflation = 4.6%
Dec8.25%S&L crisis. Fed lowered rates.
1990: GDP = 1.9%, Unemployment = 6.3%, Inflation = 6.1%
Dec7.0%Recession began in July.
1991: GDP = -0.1%, Unemployment = 7.3%, Inflation = 3.1%
Dec4.0%Recession ended in March.
1992: GDP = 3.6%, Unemployment = 7.4%, Inflation = 2.9%
Apr 93.75%Expansion.
Jul 23.25% 
Sep 43.0%Clinton took office in 1993. Fed made no changes.
1994: GDP = 4.0%, Unemployment = 5.5%, Inflation = 2.7%
Feb 43.25% 
Mar 223.5% 
Apr 183.75% 
May 174.25% 
Aug 164.75% 
Nov 155.5%Raised rates.
1995: GDP = 2.7%, Unemployment = 5.6%, Inflation = 2.5%
Feb 16.0%Raised rates.
Jul 65.75%Lowered rates.
Dec5.5% 
1996: GDP = 3.8%, Unemployment = 5.4%, Inflation = 3.3% 
Jan 315.25%Kept rates low despite inflation.
1997: GDP = 4.5%, Unemployment = 4.7%, Inflation = 1.7% 
Mar 255.5% 
1998: GDP = 4.5%, Unemployment = 6%, Inflation = 1.6%
Sep 295.25%LTCM crisis.
Oct 155.0% 
Nov4.75% 
1999: GDP = 4.7%, Unemployment = 6%, Inflation = 2.7%
Jun 305.0%Raised rates
Aug 245.25% 
Nov 165.5% 
2000: GDP = 4.1%, Unemployment = 6%, Inflation = 3.4%
Feb 25.75%Raised rates despite stock market decline in March.
Mar 216.0%
May6.5%
2001: GDP = 1.0%, Unemployment = 6%, Inflation = 1.6% 
Jan 36.0%Bush took office. 
Jan 315.5%
Mar 205.0%Recession began. Fed lowered rates to fight it.
Apr 184.5%
May 154.0%
Jun 273.75%EGTTRA tax rebate enacted.
Aug 213.5% 
Sep 173.0%9/11 attacks.
Oct 22.5%Afghanistan War.
Nov 62.0% 
Dec 111.75% 
2002: GDP = 1.8%, Unemployment = 6%, Inflation = 2.4%
Nov 61.25% 
2003: GDP = 2.8%, Unemployment = 6%, Inflation = 1.9%
Jun 251.00%JGTRRA tax cuts enacted.
2004: GDP = 3.8%, Unemployment = 6%, Inflation = 3.3%
Jun 301.25%Low rates pushed interest-only loans. Helped cause Subprime Mortgage Crisis.
Aug 101.5%
Sep 211.75%
Nov 102.0%
Dec 142.25% 
2005: GDP = 3.3%, Unemployment = 6%, Inflation = 3.4%
Feb 22.5%Borrowers could not afford mortgages when rates reset in 3rd year. 
Mar 222.75%
May 33.0%
Jun 303.25%
Aug 93.5% 
Sep 203.75% 
Nov 14.0% 
Dec 134.25% 
Fed Chair Ben Bernanke (February 2006 - January 2014)
2006: GDP = 2.7%, Unemployment = 6%, Inflation = 2.5% 
Jan 314.5%Raised to cool housing market bubble. More homeowners default.
Mar 284.75%
May 105.0%
Jun 295.25%
2007: GDP = 1.8%, Unemployment = 6%, Inflation = 4.1%
Sep 184.75%Home sales fell.
Oct 314.5% 
Dec 114.25%LIBOR rose.
2008: GDP = -0.3%, Unemployment = 6%, Inflation = 0.1%
Jan 223.5% 
Jan 30 3.0%Tax rebate.
Mar 182.25%Bear Stearns bailout.
Apr 302.0%Lehman fails. Bank bailout approved. AIG bailout.
Oct 81.5%
Oct 291.0%
Dec 160.25%Effectively zero. The lowest fed funds rate possible.
Fed Chair Janet Yellen (February 2014 - January 2018)
2015: GDP = 2.6%, Unemployment = 6%, Inflation = 0.7% 
Dec 170.5%Growth stabilized.
2016: GDP = 3.2%, Unemployment = 4.6%, Inflation = 0.4% (as of December, 19 2016)
Dec 140.75% 
2017: GDP, Unemployment and Inflation TBD
Mar 151.0%Fed projects steady growth.
Jun 141.25%

(Sources: New York Fed. "A History of Fed Leaders and Interest Rates," The New York Times, December 16, 2015.)