History of the Federal Funds Rate: Highs, Lows, and Charts

How the benchmark has changed through history

There have been exceptions to the Federal Reserve's policy of keeping the fed funds rate between 2.0 percent and 5.0 percent, which helps ensure a healthy economy. To combat out-of-control inflation, the country's benchmark rate has been raised substantially above that range at times. It has also dropped below 2% in order to boost economic growth. Examining the Fed's modifications to the fed funds rate reveals how the central bank has dealt with inflation and recessions in the past.

Key takeaways

  • In reaction to double-digit inflation, the highest fed funds rate was 20% in 1980.
  • In 2008, the federal funds rate was zero, and in March 2020, it was zero again in response to the coronavirus epidemic.
  • In May 2022, the FOMC indicated that it will keep raising interest rates in response to rising inflation.

Lowest fed funds rate

The federal funds rate is practically 0 at its all-time low. The Federal Reserve has lowered the interest rate twice, to a range of 0.0 percent to 0.25 percent. The first time was in 2008, amid the financial crisis, and the Fed didn't start raising rates again until December 2015. The second occurrence was in March 2020, when the worldwide health crisis erupted. In March 2022, however, the Fed began raising interest rates in an effort to combat excessive inflation. Before 2008, the lowest fed funds rate was in the range of 0.75 percent to 1.0 percent, set in 2003 to counteract the 2001 recession. At the time, there were concerns that the economy was heading into deflation. Deflation happens when prices continue to decline, causing purchasers to postpone purchases while they wait for further lower prices.

Highest fed funds rate

To battle double-digit inflation, the fed funds rate reached a peak of 20% in 1980. When President Richard Nixon decoupled the currency from the gold standard in March 1973, inflation began to soar. In December 1974, inflation jumped from 4.7 percent to 12.3 percent. The Federal Reserve raised the fed funds rate from 7% in March to 11% in August. Through April 1975, inflation remained in the double digits. In March 1975, the Fed raised the benchmark rate to 16%, deepening the 1973-1975 recession. It then changed course, bringing the rate down to 5.25 percent by April 1975. These abrupt shifts were part of a monetary policy of "stop-go." They weren't long enough to bring down inflation or boost growth. To stay abreast of the Fed's interest rate hikes, perplexed businesses kept prices high, which exacerbated inflation. Fed officials discovered that maintaining inflation expectations was an important part of controlling inflation. In 1979, Federal Reserve Chairman Paul Volcker put an end to the Fed's stop-go strategy. Instead, he hiked rates and left them there in order to bring inflation to a halt. The 1980 recession resulted from this, but it effectively eliminated double-digit inflation, which hasn't been a concern since.

Fed funds rate history

The graphs below illustrate the changes in the target fed funds rate since 1971.                                                                                                                                                                                                                                                                                                                                                                                                       After its sessions, the Federal Open Market Committee (FOMC) did not declare its target interest rate until October 1979. Through its open market operations, the Fed changed the rate. As a result, banks were obliged to predict what the rates would be. The Fed attempted to combat inflation without regulating inflation expectations. In 1979, the Federal Reserve began targeting the money supply to combat inflation. As a result, the fed funds rate changed a lot between 1979 and 1982. The Fed then reverted to targeting the fed funds rate in 1982. For the first time in February 1994, the FOMC explicitly declared its policy modifications. Since then, it has made it plain what it wants the interest rate to be. This policy regulates inflation expectations and reduces disruptions caused by Fed surprises. These are the fed funds target rates, as well as the events that precipitated the modifications on the occasions where they did. The Federal Reserve usually announces a rate range for its key interest rate. The top end of the range is shown in the tables below, while the low end is a quarter point lower. In addition, each year includes:
  • The gross domestic product (GDP)
  • The unemployment rate
  • The inflation rate
The Federal Reserve hiked rates by half a percentage point on May 4, bringing the federal funds rate target range to 0.75 percent to 1 percent. To battle inflation, the Board of Governors stated that they plan to keep raising rates throughout the year. These are the fed funds target rates, as well as the events that precipitated the modifications on the occasions where they did. The Federal Reserve usually announces a rate range for its key interest rate. The top end of the range is shown in the tables below, while the low end is a quarter-point lower. In addition, each year includes:
  • The gross domestic product (GDP)
  • The unemployment rate
  • The inflation rate

Fed Chair Arthur Burns (January 1970 - March 1978)

In 1971, the gross domestic product (GDP) was 3.3 percent, the unemployment rate was 6.0 percent, and inflation was 4.4 percent.
Date Fed Funds Rate Event
Jan. 12 4.25% Expansion
Feb. 9 3.75% No notable event
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% The Fed lowered rates to boost growth
Nov. 16 5.0% No notable event
In 1972, the GDP was 5.3 percent. Inflation was 3.2 percent, and unemployment was 5.2 percent.
Date Fed Funds Rate Event
March 21 5.5% Nixon devalued the dollar, creating inflation
Dec. 19 5.75% Fed raised rates to combat 3.4% YoY inflation
The GDP was 5.6% in 1973, unemployment was 4.9%, and inflation was 6.2%.
Date Fed Funds Rate Event
Jan. 19 6.0% Stagflation
Feb. 23 6.5% No notable event
March 20 7.0% No notable event
April 17 7.25% Inflation at 5.1%
May 15 7.5% 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, the gross domestic product (GDP) was -0.5 percent, unemployment was 7.2 percent, and inflation was 11.0 percent.
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% The Fed lowered rates to end the recession
In 1975, the gross domestic product (GDP) was -0.2%, unemployment was 8.2%, and inflation was 9.1%.
Date Fed Funds Rate Event
Jan. 21 7.0% No notable event
Feb. 19 6.0% The economy contracted 4.8% in Q1 with inflation at 11.2%
March 21 5.5% 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 fell to 7.9%
In 1976, the gross domestic product (GDP) was 5.4 percent, unemployment was 7.8 percent, and inflation was 5.8 percent.
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% The official end of gold standard
Nov. 16 4.75% Lowered from July–November
In 1977, the gross domestic product (GDP) was 4.6 percent, unemployment was 6.4 percent, and inflation was 6.5 percent.
Date Fed Funds Rate Event
Aug. 16 6.0% Inflation rose 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 gross domestic product (GDP) was 5.5 percent, unemployment was 6.0 percent, and inflation was 7.6 percent.
Date Fed Funds Rate Event
Jan. 17 6.75% Inflation rose to 6.8%
April 19 7.0% No notable event
May 17 7.5% No notable event
June 21 7.75% No notable event
Aug. 16 8.0% Inflation rose to 7.8%
Sept. 20 8.5% No notable event
Oct. 18 9.0% Inflation at 8.9%
Nov. 21 9.75% No notable event
Dec. 20 10.0% Raised each month from April through December

Fed Chair Paul Volcker (August 1979 - August 1987)

In 1979, the economy grew at 3.2 percent, unemployment was at 6.0 percent, and inflation was at 11.3 percent.
Date Fed Funds Rate Event
April 17 10.25% Inflation at 10.5%
July 20 10.5% No notable event
Aug. 15 11.0% No notable event
Sept. 19 11.5% Inflation rose to 12.2%
Oct. 8 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, the gross domestic product (GDP) was -0.3%, unemployment was 7.2 percent, and inflation was 13.5 percent.
Date Fed Funds Rate Event
Feb. 15 15.0% A recession began in January, with Inflation at 14.2%
March 18 20.0% No notable event
May 15 11.5% Conference calls on April 29 and May 6 lowered rates
June 5 8.5% The recession ended in July
Aug. 7 10.0% The Fed raised rates; inflation at 12.9%
Sept. 16 11.0% No notable event
Oct. 13 12.0% No notable event
Nov. 21 18.0% Inflation eased to 12.6%
Dec. 5 20.0% Conference call
Dec. 29 18.0% Lowered two points
In 1981, the gross domestic product (GDP) was 2.5 percent, unemployment was 8.5 percent, and inflation was 10.3 percent.
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% A recession began in July
Nov. 17 13.0% Gradually lowered rates over six months
Dec. 22 12.0% Inflation at 8.9%
In 1982, the gross domestic product (GDP) was -1.8 percent, unemployment was 10.8 percent, and inflation was 6.2 percent. The data comes from the Federal Reserve Bank of St. Louis' now-defunct target fed funds rate series, which ran from 1982 to 2007.---
Date Fed Funds Rate Event
March 30 15.0% Gradually raised rates three points over four months
July 15 13.0% Conference call; gradually lowered rates
Aug. 24 9.5% Gradually lowered rates
Nov. 16 9.5% Recession ended
Dec. 21 8.5% Inflation at 3.8%
The GDP was 4.6% in 1983, unemployment was 8.3%, and inflation was 3.2%.
Date Fed Funds Rate Event
May 24 8.63% Gradually raised rates over five months
Aug. 23 9.75% Raised from May to August
Oct. 4 9.38% Lowered from August to October
The GDP was 7.2% in 1984, unemployment was 7.3%, and inflation was 4.3%.
Date Fed Funds Rate Event
March 29 10.5% Raised rates again
July 17 11.0%. No notable event
Aug. 21 11.5% Raised from March to August
Oct. 2 11% Began lowering again
Nov. 7 10% No notable event
Dec. 18 8.75% Lowered from September to December
The GDP was 4.2% in 1985, unemployment was 7.0%, and inflation was 3.6%.
Date Fed Funds Rate Event
March 26 8.38% Raised from February to mid-March
May 20 7.75% Began lowering again
Aug. 20 7.75% Raised again
Dec. 17 8.0% Lowered again
The GDP was 3.5% in 1986, unemployment was 6.6%, and inflation was 1.9%.
Date Fed Funds Rate Event
April 18 7.31% Continued lowering rates
Aug. 21 5.88% Lowered until August
Dec. 16 5.88% Began raising rates again

Fed Chair Alan Greenspan (August 1987-January 2006)

The GDP was 3.5% in 1987, unemployment was 5.7%, and inflation was 3.6%.
Date Fed Funds Rate Event
May 19 6.5% Continued raising rates to fight inflation
Sept. 22 7.25% No notable event
Nov. 4 6.81% Lowered after Black Monday stock market crash
The GDP was 4.2% in 1988, unemployment was 5.3%, and inflation was 4.1%.
Date Fed Funds Rate Event
Feb. 10 6.25% Continued lowering
March 29 6.5% Began raising to fight inflation
Aug. 16 8.13% No notable event
Dec. 14 8.38% No notable event
The GDP was 3.7% in 1989, unemployment was 5.4%, and inflation was 4.8%.
Date Fed Funds Rate Event
Dec. 19 8.5% S&L crisis; The Fed lowered rates to calm markets
The GDP was 1.9% in 1990, unemployment was 6.3%, and inflation was 5.4%.
Date Fed Funds Rate Event
July 13 8.25% The recession began in July
Oct. 29 7.75% Continued lowering rates to boost the economy despite inflation
Nov. 14 7.5% No notable event
Dec. 7 7.25% Conference call
Dec. 18 7.25% The economy contracted 3.6% in Q4
The GDP was -0.1% in 1991, unemployment was 7.3%, and inflation was 4.2%.
Date Fed Funds Rate Event
Jan. 9 6.75% Economy contracted by 1.9%
Feb. 1 6.25% No notable event
March 8 6.0% Recession ended
April 30 5.75% Conference call
Aug. 6 5.5% No notable event
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% No notable event
Dec. 20 4.0% No notable event
The GDP was 3.5% in 1992, unemployment was 7.4%, and inflation was 3.0%.
Date Fed Funds Rate Event
April 9 3.75% The Fed lowered rates to fight unemployment
July 2 3.25% No notable event
Sept. 4 3.0% No notable event
In 1993, the GDP was 2.8%, unemployment was 6.5%, and inflation was 3.0%. President Clinton took office in 1993. The Fed made no changes. The GDP was 4.0% in 1994, unemployment was 5.5%, and inflation was 2.6%.
Date Fed Funds Rate Event
Feb. 4 3.25% Fed raised rates to keep the economy healthy
March 22 3.5% No notable event
April 18 3.75% Conference call
May 17 4.25% No notable event
Aug. 16 4.75% No notable event
Nov. 15 5.5% Raised rates
The GDP was 2.7% in 1995, unemployment was 5.6%, and inflation was 2.8%.
Date Fed Funds Rate Event
Feb. 1 6.0% Raised rates
July 6 5.75% Lowered rates
Dec. 19 5.5% No notable event
The GDP was 3.8% in 1996, unemployment was 5.4%, and inflation was 3.0%.
Date Fed Funds Rate Event
Jan. 31 5.25% Kept rates low despite inflation
The GDP was 4.4% in 1997, unemployment was 4.7%, and inflation was 2.3%.
Date Fed Funds Rate Event
March 25 5.5% Raised rates despite low inflation
The GDP was 4.5% in 1998, unemployment was 4.4%, and inflation was 1.6%.
Date Fed Funds Rate Date
Sept. 29 5.25% Lowered rates to fight the LTCM crisis
Oct. 15 5.0% No notable event
Nov. 17 4.75% No notable event
The GDP was 4.8% in 1999, unemployment was 4.0%, and inflation was 2.2%.
Date Fed Funds Rate Event
June 30 5.0% Raised rates because the economy was doing well
Aug. 24 5.25% No notable event
Nov. 16 5.5% No notable event
The GDP was 4.1% in 2000, unemployment was 3.9%, and inflation was 3.4%.
Date Fed Funds Rate Event
Feb. 2 5.75% No notable event
March 21 6.0% No notable event
May 16 6.5% Raised rates despite a stock market drop
The GDP was 1.0% in 2001, unemployment was 5.7%, and inflation was 2.8%.
Date Fed Funds Rate Event
Jan. 3 6.0% No notable event
Jan. 31 5.5% Bush took office
March 20 5.0% Recession
April 18 4.5% No notable event
May 15 4.0% No notable event
June 27 3.75% EGTRRA tax rebate enacted
Aug. 21 3.5% No notable event
Sept. 11 3.0% 9/11 attacks
Oct. 2 2.5% Afghanistan War
Nov. 6 2.0% Recession ended
Dec. 11 1.75% No notable event
The GDP was 1.7% in 2002, unemployment was 6.0%, and inflation was 1.6%. The following tables have data taken from The Federal Reserve.
Date Fed Funds Rate Event
Nov. 6 1.25% The Fed lowered rates to fight sluggish growth
In 2003, the GDP was 2.8 percent. Inflation was 2.3 percent, and unemployment was 5.7 percent.
Date Fed Funds Rate Event
June 25 1.00% JGTRRA tax cuts enacted to spur growth
In 2004, the economy grew at a rate of 3.9 percent, unemployment was at 5.4 percent, and inflation was at 2.7 percent.
Date Fed Funds Rate Event
June 30 1.03% Low rates pushed interest-only loans
Aug. 10 1.5% No notable event
Sept. 21 1.75% No notable event
Nov. 10 2.0% No notable event
Dec. 14 2.25% No notable event
The GDP was 3.5 percent in 2005, with unemployment at 4.9 percent and inflation at 3.4 percent.
Date Fed Funds Rate Event
Feb. 2 2.5% No notable event
March 22 2.75% No notable event
May 3 3.0% No notable event
June 30 3.25% No notable event
Aug. 9 3.5% No notable event
Sept. 20 3.75% No notable event
Nov. 1 4.0% No notable event
Dec. 13 4.25% No notable event

Fed Chair Ben Bernanke (February 2006 - January 2014)

In 2006, the economy grew at a rate of 2.8 percent, unemployment was at 4.4 percent, and inflation was at 3.2 percent.
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% No notable event
June 29 5.25% No notable event
GDP was 2.0%, unemployment was 5.0 percent, and inflation was 2.8 percent in 2007.
Date Fed Funds Rate Event
Sept. 18 4.75% Home sales fell
Oct. 31 4.5% No notable event
Dec. 11 4.25% LIBOR rose; stock market peaked; recession began
In 2008, the GDP increased by 0.1 percent, unemployment increased by 7.3 percent, and inflation increased by 3.8 percent. The target funds rate became a range on Dec. 16, 2008, as shown in the tables by the upper limit.
Date Fed Funds Rate Event
Jan. 22 3.5% No notable event
Jan. 30 3.0% No notable event
March 18 2.25% Bear Stearns bailout
April 30 2.0% No notable event
Oct. 8 1.5% Lehman failed; bank bailout approved
Nov. 29 1.0% AIG bailout
Dec. 16 0.25% Effectively zero
Between 2008 and 2015, the Fed kept the rate at zero. In June 2009, the recession came to an end.

Fed Chair Janet Yellen (February 2014 - February 2018)

GDP was 2.3 percent in 2015, with unemployment at 5.0 percent and inflation at 0.1 percent.
Date Fed Funds Rate Event
Dec. 17 0.50% Growth stabilized; Fed began raising rates
In 2016, the GDP increased by 1.7 percent, unemployment increased by 4.7 percent, and inflation increased by 1.3 percent.
Date Fed Funds Rate Event
Dec. 15 0.75% Fed maintained a steady increase in rates
In 2017, the GDP increased by 2.3 percent, unemployment increased by 4.1 percent, and inflation increased by 2.1 percent.
Date Fed Funds Rate Event
March 16 1.00% Continued raising rates
June 15 1.25% No notable event
Dec. 14 1.5% No notable event
 

Fed Chair Jerome Powell (Since February 2018)

In 2018, GDP increased by 2.9 percent, unemployment increased by 3.9 percent, and inflation increased by 2.4 percent.
Date Fed Funds Rate Event
March 22 1.75% No notable event
June 14 2.00% No notable event
Sept. 27 2.25% No notable event
Dec. 20 2.50% Fed promised to stop raising rates
In 2019, the GDP increased by 2.3 percent, unemployment increased by 3.5 percent, and inflation increased by 1.9 percent.
Date Fed Funds Rate Event
Aug. 1 2.25% Lowered rates despite growth
Sept. 19 2.00% Fed was concerned about slowing growth
Oct. 31 1.75% Slow global growth and muted inflation
GDP was down 3.4 percent in 2020, inflation was 1.2 percent, and unemployment was 6.7 percent.
Date Fed Funds Rate Event
March 3 1.25% Coronavirus pandemic
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
In 2021, GDP climbed by 6.9%, the highest one-year gain since 1984; on the other hand, inflation increased by 7%, the highest increase since 1982.
Target Federal Funds Rates for 2021
Date Fed Funds Rate Event
Jan. 27 0.25% Effectively zero
March 17 0.25% Effectively zero
April 28 0.25% Effectively zero
June 16 0.25% Effectively zero
July 28 0.25% Effectively zero
Sept. 22 0.25% Effectively zero
Nov. 4 0.25% Effectively zero
Dec. 15 0.25% Effectively zero
Inflation remained high in the first quarter of 2022. In February, year-over-year inflation was 7.9%.
Target Federal Funds Rates for 2022
Date Fed Funds Rate Event
Jan. 26 0.25% Effectively Zero
March 16 0.5% Inflation trumped concerns over the Russian invasion of Ukraine
May 4 1% The Russian invasion of Ukraine continues as China brings back COVID-19 lockdowns
This data comes from the Federal Reserve as it announces the Federal Open Market Committee's monetary policy stance (eight times a year).

Frequently Asked Questions (FAQs)

When will the Fed raise interest rates?

The Federal Reserve usually announces its interest rate plans before they are implemented. Analysts can use the dot plot to see where members stand on interest rate changes. The Federal Reserve also publishes meeting minutes and members speak to the public and Congress on a regular basis.

What happens when the Fed raises interest rates?

Interest rates are influenced by the Federal Reserve, and the consequences are felt throughout the interest rate environment. It means that anything involving interest rates will be influenced. If the Fed raises interest rates, you will pay more on credit cards and mortgages, but you'll get more interest on your savings and bonds.

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