The federal funds rate has ranged from near 0% to 20% in the past 70 years, driving mortgage costs, savings account yields, and economic cycles. As of September 16, 2026, the target range stood at 3.50%–3.75% (confirm current — the FOMC was meeting the same day) — below the 2023 peak of 5.25%–5.50% but historically elevated compared to the near-zero era of 2008–2022.
Federal Funds Rate: Key Historical Periods
| Era | Rate Range | What Drove It |
|---|---|---|
| 1954–1965 | 1.00%–4.00% | Post-war economic expansion |
| 1966–1979 | 4.00%–13.00% | Vietnam War spending, oil shocks, rising inflation |
| 1980–1982 | 13.00%–20.00% | Volcker’s inflation-fighting peak |
| 1983–2000 | 5.00%–9.00% | Disinflation, dot-com boom |
| 2001–2003 | 6.50% → 1.00% | 9/11, dot-com bust recession |
| 2004–2006 | 1.00%–5.25% | Normalization, housing boom |
| 2007–2008 | 5.25% → 0.25% | Financial crisis emergency cuts |
| 2009–2015 | 0.00%–0.25% | Post-crisis zero lower bound |
| 2015–2018 | 0.25%–2.50% | Gradual normalization |
| 2019–2020 | 2.50% → 0.25% | Pre-COVID cuts then COVID emergency |
| 2020–2021 | 0.00%–0.25% | COVID-era zero lower bound |
| 2022–2023 | 0.25%–5.25–5.50% | Historic inflation-fighting cycle |
| 2024 | 5.50% → 4.25–4.50% | Three rate cuts (Sep, Nov, Dec) |
| 2025 | 4.25–4.50% → 3.50–3.75% | Held through summer, then three cuts in the final months |
| 2026 (as of Sept. 16) | 3.50%–3.75% (confirm current) | Five holds Jan.–Jul.; FOMC met again Sept. 15–16 |
The Volcker Shock: The Highest Rates in History (1980–1982)
When Paul Volcker became Fed Chair in 1979, inflation was running at 13.5% annually — driven by two oil shocks and fiscal spending. His solution: raise rates aggressively until inflation broke.
- June 1981: Federal funds rate hit 20% — an all-time peak
- Prime rate simultaneously hit 21.5%
- A 30-year fixed mortgage in 1981 cost 18.5% interest
- On a $100,000 mortgage at 18.5%, monthly payments were roughly $1,550, compared to roughly $650 at a 6.76% rate (the approximate average 30-year fixed rate as of September 2026)
The medicine worked — but at a steep cost. The US entered a severe recession in 1981–1982, with unemployment peaking at 10.8%. By 1983, inflation had fallen to under 3%.
The Long Zero Era (2008–2015 and 2020–2022)
The US economy sat at near-zero interest rates for a combined 9 years across two periods:
2008–2015: After the financial crisis, the Fed cut rates to 0%–0.25% in December 2008 and held them there for 7 years — the longest zero-rate period in US history. Savings account rates collapsed to 0.01%–0.10% APY at most banks.
2020–2022: COVID-19 prompted another emergency cut to zero in March 2020. The Fed kept rates near zero until March 2022, partly fueling the 2021–2022 inflation surge.
The 2022–2023 Rate Hike Cycle: Fastest in 40 Years
| Date | Rate Change | New Target Range |
|---|---|---|
| March 2022 | +25 bps | 0.25%–0.50% |
| May 2022 | +50 bps | 0.75%–1.00% |
| June 2022 | +75 bps | 1.50%–1.75% |
| July 2022 | +75 bps | 2.25%–2.50% |
| September 2022 | +75 bps | 3.00%–3.25% |
| November 2022 | +75 bps | 3.75%–4.00% |
| December 2022 | +50 bps | 4.25%–4.50% |
| February 2023 | +25 bps | 4.50%–4.75% |
| March 2023 | +25 bps | 4.75%–5.00% |
| May 2023 | +25 bps | 5.00%–5.25% |
| July 2023 | +25 bps | 5.25%–5.50% (peak) |
From near-zero to 5.50% in just 16 months — the fastest hiking cycle since the Volcker era.
2024–2026: Cutting Cycle
After holding at 5.25%–5.50% from July 2023 through August 2024, the Fed began cutting:
| Date | Change | New Target |
|---|---|---|
| September 2024 | −50 bps | 4.75%–5.00% |
| November 2024 | −25 bps | 4.50%–4.75% |
| December 2024 | −25 bps | 4.25%–4.50% |
| January–August 2025 | Held | 4.25%–4.50% |
| September–December 2025 | −75 bps total (three 25 bp cuts) | 3.50%–3.75% |
| January–July 2026 | Held (five consecutive meetings) | 3.50%–3.75% |
| September 15–16, 2026 | Decision pending | Confirm at federalreserve.gov |
The exact month of each individual 2025 cut is approximate — see the federal funds rate guide for the month-by-month effective-rate data from FRED. Always verify the current rate at federalreserve.gov before relying on this table.
How Rate History Affects Savers Today
Understanding this history explains why high-yield savings accounts have been paying meaningfully more than the near-zero rates of 2009–2022, even after the 2024–2025 cutting cycle. Anyone who opened a savings account between 2009 and 2022 earned essentially nothing. The current environment still rewards savers relative to that era — see the best high-yield savings accounts guide for current top rates.
For what these rate changes mean in practice for your accounts, see how the Federal Reserve affects your savings and the full Interest Rates & Federal Reserve hub.
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