United States effective federal funds rate, annual average 2015–2025

PROVEN. The Federal Reserve's H.15 effective federal funds series shows annual-average overnight rates moving from 0.13% in 2015 to 5.14% in 2024 and 4.21% in 2025. The sharp rise after 2021 was a key tightening of financing conditions after years of unusually low rates. Higher rates generally increase costs for floating-rate loans, credit-card borrowing and company financing, although they can increase returns available to depositors. This indicator is not the Fed's announced target range: it is the realised effective market rate, averaged over each full calendar year. The St. Louis Fed's RIFSPFFNA series republishes the Board of Governors' H.15 annual effective federal funds rate. Its published notes specify that the observations are averages of daily figures. The effective rate is based on the interest rate on overnight unsecured federal-funds transactions, influenced by the central bank's operational corridor and target range. It is not equivalent to the upper bound of the target, the Bank Prime Loan Rate, the ten-year Treasury yield or an end-December monetary-policy decision. Using an annual average matters particularly in 2022, a year of rapid rate changes: the annual value was 1.69% even though late-December market rates were much higher. The Federal Open Market Committee decides its target stance in pursuit of the US monetary mandate; the Board and New York Fed implement the operating framework. Banks, institutional lenders and borrowers determine actual trades and transmission to retail borrowing products. A tightening can reduce demand and contribute to slower inflation after a lag, but it may also weaken investment, real-estate transactions and labour demand. Households with adjustable-rate obligations bear some costs more immediately than those with fixed-rate mortgages. Savers, newly purchasing debt securities, may earn more yield. The outcome is distributional, and the annual average by itself cannot tell which group gained more. Rates averaged below 0.5% in 2015–2016 and rose to 2.16% in 2019. Pandemic emergency easing pushed the 2021 annual average down to 0.08%. Tightening lifted the 2022 average to 1.69% and the 2023–2024 averages above five percent; the 2025 figure moderated to 4.21%. A common counter-view treats low interest rates as unconditionally positive because they stimulate activity. Another treats higher rates as unconditionally beneficial because they can suppress inflation. Neither is universally true: the appropriate policy stance depends on inflation, employment, supply constraints and financial stability. Watch official FOMC releases, core inflation, employment and the distinction between target and market rates. A change in this annual series need not coincide with any single meeting date. | Year | % | | --- | ---: | | 2015 | 0.13 | | 2016 | 0.39 | | 2017 | 1.00 | | 2018 | 1.83 | | 2019 | 2.16 | | 2020 | 0.37 | | 2021 | 0.08 | | 2022 | 1.69 | | 2023 | 5.03 | | 2024 | 5.14 | | 2025 | 4.21 | - Federal Reserve Bank of St. Louis / Board of Governors H.15 (2 January 2026) - Federal Reserve Board of Governors (2026) Related driver: Federal Reserve monetary policy, inflation, credit and US employment. Data begins: 2015.