Fed Funds Rate History: Its Highs, Lows, and Charts
How the Benchmark Has Changed Through History
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Image by Maddy Price © The Balance 2020
The Federal Reserve tends to keep the fed funds rate within a 2.0% to 5.0% sweet spot that maintains a healthy economy, but there have been exceptions.
There were times in history when the nation's benchmark rate was increased well above the sweet spot to curb runaway inflation. It's also dipped well below 2% to stimulate economic growth.
Examining the Fed's changes to the fed funds rate provides insight into how the Fed has managed both inflation and recession.
Lowest Fed Funds Rate
The all-time low is effectively zero. The Fed lowered the rate to a range of 0.0% to 0.25% twice. The first was during the financial crisis of 2008, and the Fed didn't resume raising rates until December 2015.
The second time was in March 2020. In September 2020, the Fed announced it would keep rates in that range until 2023. At the December Federal Open Market Committee (FOMC) meeting, it said it would keep its target for fed funds rate at a range of 0.0% to 0.25%.
Prior to 2008, the lowest fed funds rate was in the range of 0.75% to 1.0% in 2003. This was a move to combat the 2001 recession. At that time, there were fears that the economy was drifting toward deflation. That's when prices keep falling, convincing buyers to delay purchases to get the lower price.
Highest Fed Funds Rate
The fed funds rate reached a high of 20.0% in 1980 to combat double-digit inflation.
Inflation began to skyrocket starting in March 1973 when President Richard Nixon disengaged the dollar from the gold standard. Inflation almost tripled from 4.7% to 12.3% in December 1974. The Fed doubled the fed funds rate from 7.0% in March to 11.0% by August (see tables below).
Inflation continued to remain in the double digits through April 1975. The Fed increased the benchmark rate to 13.0% in July 1974. This worsened the 1973-1975 recession. The Fed reversed course, dramatically lowering the rate to 5.25% by April 1975.
These sudden changes, part of “stop-go” monetary policy, were not sustained enough to either end inflation or spur growth. As a result, confused businesses 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.
Fed Funds Rate History
The charts below show the targeted fed funds rate changes since 1971. Until October 1979, the Federal Open Market Committee (FOMC) didn't announce its target interest rate after meetings. The Fed adjusted the rate through its open market operations. As a result, banks 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 and minimizes disruptions caused by surprises from the Fed.
Here are the target fed funds rates along with the event that triggered the change. The Fed typically announces a range for its benchmark rate. The tables below show the high end of the range. The low end is a quarter-point lower.
Fed Chair Arthur Burns (January 1970-March 1978)
In 1971, the GDP was 3.3%, the unemployment rate was 6.0%, and inflation was 3.3%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 12 | 4.25% | Expansion |
Feb. 9 | 3.75% | |
March 9 | 5.0% | Inflation at 4.7% year-over-year |
July 27 | 5.5% | Nixon shock; Weakened gold standard; Tariffs |
Aug. 24 | 5.75% | Wage-price controls |
Oct. 19 | 5.25% | Fed lowered rate to boost growth |
Nov. 16 | 5.0% |
In 1972, GDP was 5.3%, unemployment was 5.2%, and inflation was 3.4%.
Date | Fed Funds Rate | Event |
---|---|---|
March 21 | 5.5% | Nixon devalued dollar, creating inflation |
Dec. 19 | 5.75% | Fed raised rate to combat 3.4% YOY inflation |
In 1973, GDP was 5.6%, unemployment was 4.9%, and inflation was 8.7%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 16 | 6.0% | Stagflation |
Feb. 13 | 6.5% | |
March 20 | 7.0% | |
April 17 | 7.25% | Inflation at 5.1% |
May 15 | 7.75% | Inflation at 5.5% |
June 19 | 8.5% | Inflation at 6.0% |
July 17 | 10.25% | Recession |
Aug. 21 | 11.0% | OPEC embargo worsened inflation in October |
In 1974, GDP was -0.5%, unemployment was 7.2%, and inflation was 12.3%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 20 | 9.0% | Recession |
March 19 | 10.0% | Embargo ended in March |
April 16 | 11.0% | Fed raised rates to stop inflation |
July 16 | 13.0% | Inflation at 11.5%, Ford replaced Nixon in August |
Nov. 19 | 9.25% | Recession combined with 12.2% YOY inflation. |
Dec. 17 | 8.0% | Fed lowered rates to end recession. |
In 1975, GDP was -0.2%, unemployment was 8.2%, and inflation was 6.9%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 21 | 7.0% | |
Feb. 19 | 6.0% | Economy contracted 4.8% in Q1 with inflation at 11.2% |
March 18 | 5.75% | Recession ended |
April 15 | 5.25% | Inflation at 10.2%, Unemployment at 9% |
June 17 | 6.25% | Inflation at 9.4% |
Sept. 16 | 6.5% | Inflation falls to 7.9% |
In 1976, GDP was 5.4%, unemployment was 7.8%, and inflation was 4.9%.
Date | Fed Funds Rate | Event |
---|---|---|
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 |
In 1977, GDP was 4.6%, unemployment was 6.4%, and inflation was 6.7%.
Date | Fed Funds Rate | Event |
---|---|---|
Aug. 16 | 6.0% | Inflation rises to 7% in April |
Sept. 20 | 6.25% | Inflation at 6.6% |
Oct. 18 | 6.5% | Raised again in September and October |
Fed Chair William Miller (March 1978-August 1979)
In 1978, the GDP was 5.5%, unemployment was 6.0%, and inflation was 9.0%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 17 | 6.75% | Inflation rises to 6.8% |
April 18 | 7.0% | |
May 16 | 7.5% | |
June 20 | 7.75% | |
Aug. 15 | 8.0% | Inflation rises to 7.8% |
Sept. 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)
In 1979, GDP was 3.2%, unemployment was 6.0%, and inflation was 13.3%.
Date | Fed Funds Rate | Event |
---|---|---|
April 17 | 10.25% | Inflation at 10.5% |
July 11 | 10.5% | |
Aug. 14 | 11.0% | |
Sept. 18 | 11.5% | Inflation rises to 12.2% |
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% |
In 1980, GDP was -0.3%, unemployment was 7.2%, and inflation was 12.5%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 15 | 15.0% | Recession began in January, Inflation at 14.2% |
March 18 | 20.0% | |
May 20 | 11.5% | Conference calls on April 29 and May 6 lowered rates |
June 5 | 8.5% | Recession ends in July |
Aug. 7 | 10.0% | Raised rates back up, Inflation at 12.9% |
Sept. 16 | 11.0% | |
Oct. 21 | 12.0% | |
Nov. 21 | 18.0% | Inflation eases to 12.6% |
Dec. 5 | 20.0% | Conference call |
Dec. 29 | 18.0% | Lowered two points |
In 1981, GDP was 2.5%, unemployment was 8.5%, and inflation was 8.9%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 3 | 20.0% | Reagan took office; Volcker raised rates again |
April 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% |
In 1982, GDP was -1.8%, unemployment was 10.8%, and inflation was 3.8%.
Date | Fed Funds Rate | Event |
---|---|---|
March 30 | 15.0% | Gradually raised rates 3 points over 4 months |
July 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% |
In 1983, GDP was 4.6%, unemployment was 8.3%, and inflation was 3.8%.
Date | Fed Funds rate | Event |
---|---|---|
May 24 | 9.5% | Gradually raised rates over 5 months |
Aug. 23 | 9.75% | Raised from May to August |
Oct. 4 | 9.5% | Lowered from August to October |
In 1984, GDP was 7.2%, unemployment was 7.3%, and inflation was 3.9%.
Date | Fed Funds Rate | Event |
---|---|---|
March 27 | 10.5% | Raised rates again |
July 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 |
In 1985, GDP was 4.2%, unemployment was 7.0%, and inflation was 3.8%.
Date | Fed Funds Rate | Event |
---|---|---|
March 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 |
In 1986, GDP was 3.5%, unemployment was 6.6%, and inflation was 1.1%.
Date | Fed Funds Rate | Event |
---|---|---|
April 1 | 6.75% | Continued lowering rates |
Aug. 19 | 5.75% | Lowered until August |
Dec. 16 | 6.0% | Began raising rates again |
Fed Chair Alan Greenspan (August 1987-January 2006)
In 1987, GDP was 3.5%, unemployment was 5.7%, and inflation was 4.4%.
Date | Fed Funds Rate | Event |
---|---|---|
May 19 | 6.75% | Continued raising rates to fight inflation |
Sept. 22 | 7.25% | |
Oct. 30 | 6.75% | Lowered after Black Monday stock market crash |
In 1988, GDP was 4.2%, unemployment was 5.3%, and inflation was 4.4%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 10 | 6.5% | Continued lowering |
March 29 | 7.5% | Began raising to fight inflation |
Aug. 16 | 8.25% | |
Dec. 14 | 9.75% |
In 1989, GDP was 3.7%, unemployment was 5.4%, and inflation was 4.6%.
Date | Fed Funds Rate | Event |
---|---|---|
Dec. 19 | 8.25% | S&L crisis, Fed lowered rates to calm markets |
In 1990, GDP was 1.9%, unemployment was 6.3%, and inflation was 6.1%.
Date | Fed Funds Rate | Event |
---|---|---|
July 13 | 8.0% | Recession began in July |
Oct. 29 | 7.75% | Continued lowering rates to boost economy despite inflation |
Nov. 14 | 7.5% | |
Dec. 7 | 7.25% | Conference call |
Dec. 18 | 7.0% | Economy contracted 3.6% in Q4 |
In 1991, GDP was -0.1%, unemployment was 7.3%, and inflation was 3.1%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 9 | 6.75% | Economy contracted 1.9% |
Feb. 1 | 6.25% | |
March 8 | 6.0% | Recession ended |
April 30 | 5.75% | Conference call |
Aug. 6 | 5.5% | |
Sept. 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% | |
Dec. 20 | 4.0% |
In 1992, GDP was 3.5%, unemployment was 7.4%, and inflation was 2.9%.
Date | Fed Funds Rate | Event |
---|---|---|
April 9 | 3.75% | Fed lowered rates to fight unemployment |
July 2 | 3.25% | |
Sept. 4 | 3.0% |
In 1993, GDP was 2.8%, unemployment was 6.5%, and inflation was 2.7%.
Clinton took office in 1993. The Fed made no changes.
In 1994, GDP was 4.0%, unemployment was 5.5%, and inflation was 2.7%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 4 |
3.25% | Fed raised rates to keep economy healthy |
March 22 | 3.5% | |
April 18 | 3.75% | Conference call |
May 17 | 4.25% | |
Aug. 16 | 4.75% | |
Nov. 15 | 5.5% | Raised rates |
In 1995, GDP was 2.7%, unemployment was 5.6%, and inflation was 2.5%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 1 | 6.0% | Raised rates |
July 6 | 5.75% | Lowered rates |
Dec. 19 | 5.5% |
In 1996, GDP was 3.8%, unemployment was 5.4%, and inflation was 3.3%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 31 | 5.25% | Kept rates low despite inflation |
In 1997, GDP was 4.4%, unemployment was 4.7%, and inflation was 1.7%.
Date | Fed Funds Rate | Event |
---|---|---|
March 25 | 5.5% | Raised rates despite low inflation |
In 1998, GDP was 4.5%, unemployment was 4.4%, and inflation was 1.6%.
Date | Fed Funds Rate | Date |
---|---|---|
Sept. 29 | 5.25% | Lowered rates to fight LTCM crisis |
Oct. 15 | 5.0% | |
Nov. 17 | 4.75% |
In 1999, GDP was 4.8%, unemployment was 4.0%, and inflation was 2.7%.
Date | Fed Funds Rate | Event |
---|---|---|
June 30 | 5.0% | Raised rates because economy was doing well |
Aug. 24 | 5.25% | |
Nov. 16 | 5.5% |
In 2000, GDP was 4.1%, unemployment was 3.9%, and inflation was 3.4%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 2 | 5.75% | |
March 21 | 6.0% | |
May 16 | 6.5% | Raised rates despite stock market drop |
In 2001, GDP was 1.0%, unemployment was 5.7%, and inflation was 1.6%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 3 | 6.0% | |
Jan. 31 | 5.5% | Bush took office |
March 20 | 5.0% | Recession |
April 18 | 4.5% | |
May 15 | 4.0% | |
June 27 | 3.75% | EGTTRA tax rebate enacted |
Aug. 21 | 3.5% | |
Sept. 17 | 3.0% | 9/11 attacks |
Oct. 2 | 2.5% | Afghanistan War |
Nov. 6 | 2.0% | Recession ended |
Dec. 11 | 1.75% |
In 2002, GDP was 1.7%, unemployment was 6.0%, and inflation was 2.4%.
Date | Fed Funds Rate | Event |
---|---|---|
Nov. 6 | 1.25% | Fed lowered rates to fight sluggish growth |
In 2003: GDP was 2.9%, unemployment was 5.7%, and inflation was 1.9%.
Date | Fed Funds Rate | Event |
---|---|---|
June 25 | 1.0% | JGTRRA tax cuts enacted to spur growth. |
In 2004, GDP was 3.8%, unemployment was 5.4%, and inflation was 3.3%.
Date | Fed Funds Rate | Event |
---|---|---|
June 30 | 1.25% | Low rates pushed interest-only loans |
Aug. 10 | 1.5% | |
Sept. 21 | 1.75% | |
Nov. 10 | 2.0% | |
Dec. 14 | 2.25% |
In 2005, GDP was 3.5%, unemployment was 4.9%, and inflation was 3.4%.
Date | Fed Funds Rate | Event |
---|---|---|
Feb. 2 | 2.5% | |
March 22 | 2.75% | |
May 3 | 3.0% | |
June 30 | 3.25% | |
Aug. 9 | 3.5% | |
Sept. 20 | 3.75% | |
Nov. 1 | 4.0% | |
Dec. 13 | 4.25% |
Fed Chair Ben Bernanke (February 2006-January 2014)
In 2006, GDP was 2.9%, unemployment was 4.4%, and inflation was 2.5%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 31 | 4.5% | Raised to cool housing market bubble |
March 28 | 4.75% | Higher rates caused more mortgage defaults |
May 10 | 5.0% | |
June 29 | 5.25% |
In 2007, GDP was 1.9%, unemployment was 5.0%, and inflation was 4.1%.
Date | Fed Funds Rate | Event |
---|---|---|
Sept. 18 | 4.75% | Home sales fell |
Oct. 31 | 4.5% | |
Dec. 11 | 4.25% | LIBOR rose; Stock market peaked; Recession began |
In 2008, GDP was -0.1%, unemployment was 7.3%, and inflation was 0.1%.
Date | Fed Funds Rate | Event |
---|---|---|
Jan. 22 | 3.5% | |
Jan. 30 | 3.0% | Tax rebate |
March 18 | 2.25% | Bear Stearns bailout |
April 30 | 2.0% | |
Oct. 8 | 1.5% | Lehman fails; Bank bailout approved |
Oct. 29 | 1.0% | AIG bailout |
Dec. 16 | 0.25% | Effectively zero |
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)
In 2015, GDP was 3.1%, unemployment was 5.0%, and inflation was 0.7%.
Date | Fed Funds Rate | Event |
---|---|---|
Dec. 17 | 0.5% | Growth stabilized, so Fed began raising rates |
In 2016, GDP was 1.7%, unemployment was 4.7%, and inflation was 2.1%.
Date | Fed Funds Rate | Event |
---|---|---|
Dec. 15 | 0.75% | Fed maintained steady increase in rates |
In 2017, GDP was 2.3%, unemployment was 4.1%, and inflation was 2.1%.
Date | Fed Funds Rate | Event |
---|---|---|
March 16 | 1.0% | Continued raising rates |
June 15 | 1.25% | |
Dec. 14 | 1.5% |
Fed Chair Jerome Powell (Since February 2018)
In 2018, GDP was 3.0%, unemployment was 3.9%, inflation was 1.9%.
Date | Fed Funds Rate | Event |
---|---|---|
March 22 | 1.75% | |
June 14 | 2.0% | |
Sept. 27 | 2.25% | |
Dec. 20 | 2.5% | Fed promised to stop raising rates |
In 2019, GDP was 2.2%, unemployment was 3.5%, and inflation was 2.3%.
Date | Fed Funds Rate | Event |
---|---|---|
Aug. 1 | 2.25% | Lowered rates despite growth |
Sept. 19 | 2.0% | Fed was concerned about slowing growth |
Oct. 31 | 1.75% | Slow global growth and muted inflation |
2020
Date | Fed Funds Rate | Event |
---|---|---|
March 3 | 1.25% | Coronavirus pandemic |
March 15 | 0.25% | Effectively zero |
April 29 | 0.25% | Effectively zero |
June 10 | 0.25% | Effectively zero |
July 29 | 0.25% | Effectively zero |
Sept. 16 | 0.25% | Effectively zero |
Nov. 5 | 0.25% | Effectively zero |
Dec. 16 | 0.25% | Effectively zero |