Current Federal Funds Rate 2026 — Fed Rate History, FOMC Decisions & Impact

The federal funds rate target range was 3.50%–3.75% as of September 16, 2026, with an effective rate of 3.63% (August 2026). The Federal Open Market Committee held rates steady at its first five meetings of 2026 after cutting three times in the final months of 2025. The FOMC was scheduled to announce its next decision on September 16, 2026 — the same day as this update — so confirm the current rate at federalreserve.gov before relying on this figure. This rate is the foundation of US monetary policy and touches nearly every borrowing and saving rate in the country.

At a glance: Target range = 3.50%–3.75% (as of Sept. 16, 2026; confirm current rate) | Effective rate = 3.63% (Aug. 2026) | Prime rate = 6.75% | Last confirmed change = December 2025

Current Federal Funds Rate (as of September 16, 2026)

Source: Federal Reserve Bank of St. Louis (FRED), FEDFUNDS series; Federal Reserve H.15 release. Rates are volatile — always confirm the current target range at federalreserve.gov.

2026 FOMC Meeting Decisions

The FOMC met five times in 2026 through July and held rates steady at each meeting. The current pause follows three consecutive cuts in late 2025.

Source: Federal Reserve FOMC statements, federalreserve.gov/monetarypolicy/fomc.htm.

Federal Funds Rate History (2021–2026)

The table below uses monthly effective rate data from the Federal Reserve Bank of St. Louis to show how the fed funds rate has moved through the recent tightening and easing cycles.

Source: FRED FEDFUNDS series, Federal Reserve Bank of St. Louis.

The most striking feature of recent history is the pace of the 2022 tightening cycle. The Fed moved from near-zero to above 4% in a single calendar year — the fastest rate increase since the early 1980s. The rate then held at its 5.33% peak for 13 straight months before the cutting cycle began in September 2024.

What the Federal Funds Rate Is

The federal funds rate is the interest rate at which banks lend their excess reserves to other banks overnight. By law, depository institutions must hold a minimum level of reserves — a percentage of their total deposits — in an account at a Federal Reserve bank. On any given day, some banks end up with more reserves than required, and others come up short. The overnight lending market between these banks is where the federal funds rate applies.

The FOMC does not directly set the rate — it sets a target range. The New York Fed then conducts open market operations (primarily buying and selling Treasury securities) to keep the actual overnight lending rate within that target range. The end result is the “effective federal funds rate” you see in the data, which typically sits near the middle of the target range.

The FOMC meets eight times per year to review economic conditions and vote on any changes to the target range. Decisions are driven by the Fed’s dual mandate: maximum employment and stable prices (defined as 2% inflation over time). When inflation runs too hot, the FOMC raises rates to cool borrowing and spending. When growth slows or unemployment rises, it cuts rates to stimulate activity.

How the Rate Affects Your Money

The federal funds rate sets the floor for borrowing costs throughout the economy. Its effects travel through several channels.

Savings accounts and CDs. Banks use the fed funds rate as a reference point for what they pay depositors. When rates rise, competitive online banks raise their high-yield savings account APYs quickly. When the Fed cuts, those rates follow. The national average savings rate at traditional banks tends to stay well below the fed funds rate regardless of direction — only high-yield accounts and CDs reliably track it.

Credit cards and personal loans. Variable-rate credit cards are typically priced at the prime rate plus a margin. The prime rate, 6.75% as of September 2026, moves the same day as any fed funds rate change. If the Fed cuts 25 basis points at a future meeting, the prime rate drops to 6.50% and variable card rates fall by the same amount.

HELOCs. Home equity lines of credit are almost always tied directly to the prime rate. With prime at 6.75%, most HELOCs are priced in the 7.5%–10% range depending on the lender’s margin and the borrower’s credit.

Mortgages. Fixed-rate mortgages are not directly linked to the federal funds rate — they follow the 10-year Treasury yield, which reflects long-term growth and inflation expectations. However, the overall direction of Fed policy does influence the broader rate environment that shapes mortgage pricing.

Stock market. Lower rates reduce borrowing costs for businesses and make future earnings worth more in today’s dollars, which tends to support higher equity valuations. Higher rates have the opposite effect. Markets typically react quickly to any FOMC decision or signal about future rate changes, which is why Fed communications are closely parsed by investors.

Auto loans. New and used vehicle loan rates generally track movements in the federal funds rate with a lag of weeks to months. A falling fed funds rate, over time, filters through to lower auto loan rates at dealerships and banks.

Historical Context

The federal funds rate has moved across an enormous range over its history. The FOMC pushed rates as high as 20% in 1981 to break the inflation of that era — a level that would be unimaginable today. After the 2008 financial crisis, rates were held near zero for seven years to support recovery. They were brought back to zero again at the start of the pandemic in March 2020, and then held there until the 2022 tightening cycle began.

The 2022–2023 hiking cycle — 525 basis points of increases in 16 months — was the most aggressive since the early 1980s. The easing cycle that followed (2024–2025) delivered six cuts totaling 175 basis points, bringing the rate from 5.33% to the 3.50%–3.75% target range it has held at through mid-September 2026.

For context on how the current rate compares to savings and mortgage products, see the high-yield savings accounts guide and the mortgage rates guide.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.