Economy today
Fed interest rate today: the federal funds rate
The Federal Reserve's target range for the federal funds rate is 3.75% to 4.00%. The effective federal funds rate, the rate banks actually paid each other overnight, was 3.88% on October 23, 2026.
Source: Federal Reserve Bank of New York, Effective Federal Funds Rate. Latest figure: October 23, 2026. Updated automatically twice a day.
What the federal funds rate is
Banks keep reserves at the Federal Reserve, and a bank that is short lends from one that has extra, usually overnight. The interest on those loans is the federal funds rate. The Fed does not set it by decree: it sets a target range and uses the interest it pays on reserves and other tools to keep the actual rate inside it.
Why it matters for everyone else
Short-term rates across the economy move with the federal funds rate, including credit card rates, savings account yields and many business loans. When the Fed raises the range, borrowing gets more expensive, spending and investment cool, and inflation tends to slow. When it cuts, borrowing gets cheaper and spending tends to pick up. This chain from the Fed's rate to prices and jobs is called the monetary policy transmission mechanism.
Questions
What is the Fed interest rate right now?
The Federal Reserve's target range for the federal funds rate is 3.75% to 4.00%. The effective federal funds rate, the rate banks actually paid, was 3.88% on October 23, 2026, according to the Federal Reserve Bank of New York.
What is the federal funds rate?
The interest rate banks charge each other for overnight loans of the reserves they hold at the Federal Reserve. The Fed sets a target range for it, and it anchors other short-term interest rates in the economy.
Who sets the federal funds rate, and how often?
The Federal Open Market Committee (FOMC) sets the target range. It holds eight regularly scheduled meetings a year and can change the range at any of them, or between meetings if conditions call for it.
What is the effective federal funds rate?
The rate banks actually paid, calculated by the Federal Reserve Bank of New York each business day as the volume-weighted median of overnight federal funds trades. It normally sits inside the target range.