Latest U.S. Fed Policy rates

The Federal Reserve's policy rates are the Fed Funds upper and lower bounds, the interest rate on reserve balances (IORB, replaced IORR and IOER in July 2021). The policy rates are published every business day for the previous business day, the latest complete data is for May 19th, 2025:

Effective Fed Funds Rate (EFFR): 4.33%
Fed Funds upper bound: 4.50%
Fed Funds lower bound: 4.25%
Interest Rate on Reserve Balances (IORB): 4.4%

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Policy rate history

History of Fed policy rates (Effective Fed Funds Rate, Interest on Reserve Balances) since 2009

The United States monetary policy, primarily managed by the Federal Reserve (Fed), operates through several key rates that impact the economy in various ways. Understanding these rates is crucial for grasping how monetary policy is implemented and its effects on the financial system and broader economy.

1. Effective Fed Funds Rate (EFFR):

The Effective Federal Funds Rate (EFFR) is the weighted average of rates at which depository institutions lend funds maintained at the Federal Reserve to each other overnight. This rate is a primary tool used by the Fed to influence overall monetary conditions. Changes in the EFFR can affect other interest rates, including those for mortgages, loans, and savings, thereby influencing consumer spending, business investment, and inflation.

2. Fed Funds Upper and Lower Bounds:

The Fed Funds Rate traditionally operates within a target range set by the Federal Open Market Committee (FOMC). This range includes an upper and lower bound. The upper bound is the highest rate that banks are willing to pay to borrow funds overnight, while the lower bound is the minimum rate they are willing to accept. The bounds are used to guide the EFFR into the target range set by the FOMC, helping to maintain control over monetary policy.

3. Interest Rate on Reserve Balances (IORB):

IORB is the rate the Fed pays on reserves (both required and excess) held by banks at the central bank. This rate serves as a floor for the EFFR, as banks are unlikely to lend funds at a rate lower than what they can earn from the Fed. Adjusting the IORB can influence the EFFR and other short-term interest rates, impacting the overall lending and borrowing in the economy.

4. Standing Repo Facility:

The Standing Repo Facility is a tool that allows eligible financial institutions to borrow funds overnight from the Fed against Treasury securities or other eligible collateral. This facility helps to provide liquidity in the financial system and ensures the smooth functioning of the repo market, which is critical for short-term funding needs.

5. Reverse Repo Facility:

Conversely, the Reverse Repo Facility allows financial institutions to deposit funds at the Fed overnight in exchange for Treasury securities. This tool helps the Fed to manage the supply of reserve balances in the banking system and can support the implementation of monetary policy, particularly in maintaining the Fed Funds Rate within its target range.

How These Rates Work Together:

These various rates and facilities work in concert to achieve the Fed’s monetary policy objectives, which include maximizing employment, stabilizing prices, and moderating long-term interest rates. By adjusting these rates, the Fed can influence the amount of money circulating in the economy, which impacts inflation and economic growth.

Influence on Liquidity: The standing repo and reverse repo facilities help manage liquidity in the financial system, ensuring that there is neither too much nor too little money in circulation.
Control Over Short-term Rates: Through the EFFR, IORB, and the bounds of the Fed Funds Rate, the Fed exercises control over short-term interest rates, influencing borrowing and lending behavior.
Signal Monetary Policy Stance: Changes in these rates signal the Fed's stance on monetary policy, whether it's leaning towards tightening (to control inflation) or easing (to stimulate the economy).

In summary, these key rates and facilities are essential tools in the Fed’s arsenal for implementing monetary policy, influencing everything from bank lending rates to economic growth and inflation. Their coordinated use helps the Fed in steering the economy towards its targeted goals.