Learn · Interest rates
What Is the Federal Funds Rate?
The federal funds rate is the interest rate banks charge each other for overnight loans. The Federal Reserve sets a target range for it, and that decision ripples through borrowing costs across the economy.
Who sets it: the FOMC
The Federal Open Market Committee (FOMC) sets the target range for the federal funds rate. It holds eight scheduled meetings a year and announces its decision at 2:00 PM ET on the final day, followed by a press conference with the Fed Chair.
The committee has 12 voting members: the seven members of the Federal Reserve Board, the president of the New York Fed, and four of the other eleven regional Fed presidents, who rotate each year.
How it affects you and markets
Changes in the fed funds rate influence interest rates on credit cards, car loans, savings accounts and, indirectly, mortgages. Higher rates make borrowing more expensive and tend to slow the economy and inflation; lower rates do the opposite.
Markets react not just to the decision but to the Fed's statement and press conference, which hint at what the committee might do next.
The Summary of Economic Projections and dot plot
At four meetings a year, in March, June, September and December, the Fed also releases its Summary of Economic Projections (SEP). It shows officials' forecasts for growth, unemployment and inflation, plus the "dot plot": each official's view of where the fed funds rate should be in the coming years.
Fed Funds Rate over time
Fed Funds Rate
Effective federal funds rate, monthly average
Common questions
When is the next FOMC meeting?
The next FOMC rate decision is scheduled for Wednesday, October 28, 2026, at 2:00 PM Eastern Time.
What is the difference between the target range and the effective rate?
The FOMC sets a target range, such as 3.75%–4.00%. The effective federal funds rate is the actual average rate on overnight loans between banks, which normally stays inside that range.
What is the dot plot?
The dot plot is a chart in the Summary of Economic Projections showing where each Fed official expects the federal funds rate to be at the end of the next few years.
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Source: Board of Governors of the Federal Reserve System via FRED, Federal Reserve Bank of St. Louis. For information only, not investment advice.