Effective Federal Funds Rate
The federal funds rate is the price banks pay each other for overnight reserves. The Federal Reserve sets a target range for it, and everything from a credit card to a Treasury bill is priced off the result.
History
Target range versus effective rate
The FOMC chooses a target range, currently twenty-five basis points wide. The effective rate is the volume-weighted median of overnight trades in the fed funds market, published the next morning by the New York Fed. It normally sits inside the range, a few basis points from the middle.
The distinction matters because the effective rate can drift when reserve balances are scarce or abundant. A spike above the range is a plumbing problem, not a policy change, and the Fed has tools to pull it back.
How it reaches the real economy
The overnight rate anchors the shortest maturities: Treasury bills, commercial paper, floating-rate loans. Through expectations it also anchors longer ones. A change in the target range shows up in the prime rate within days, in credit card APRs within one or two billing cycles, and in mortgage rates only indirectly, through the 10-year.
Deposit rates adjust more slowly, and asymmetrically: they rise after hikes with a lag and fall almost immediately after cuts. That spread is a large part of how policy changes bank profitability.
Nominal versus real
A 5% policy rate with 2% inflation is a 3% real rate. The same 5% with 5% inflation is zero. Real rates are what actually change spending decisions, which is why the Fed watches the gap rather than the headline.
This page shows the nominal effective rate. The real 10-year yield page computes the same idea at the long end, using TIPS.
How this reading is calculated
We pull DFF from FRED, apply the transform shown above, and keep every observation the source publishes. Missing dates are dropped rather than filled, so holidays leave gaps instead of fake zeroes. The percentile is the share of observations since 1954 that sit below today's value.
The file is rebuilt daily. Derived series are computed by us from public-domain inputs and the formula is stated on this page, so anyone can reproduce the number from the original release.
How to read the percentile
The percentile compares today's reading with the indicator's own history, not with other indicators. A 20th percentile on this page means the current reading is lower than four fifths of all observations since 1954; it says nothing about whether that is good or bad for markets.
Extremes are the useful part. A reading above the 90th or below the 10th percentile is unusual enough to be worth explaining, and unusual readings tend to mean-revert. The middle of the distribution is mostly noise.
What is free and what is member-only
The current reading, the percentile and the full historical record are free. The most recent days of data are reserved for members, because that is the part that tells you what the indicator is doing right now rather than what it did years ago.
Members see every observation through the latest release, the same chart without the mask, and the same numbers on every indicator page. Nothing on this site is intraday.
Distribution since 1954
Each row is the share of historical observations at or below that level. A reading in the 90th percentile is higher than nine tenths of the record.
Important
Not investment advice. This page is published for information and education only. It is not a recommendation, solicitation, or offer to buy or sell any security. Market data may be delayed, incomplete, or revised. Indicators describe the past; they do not forecast returns. Past performance does not guarantee future results. Do your own research or consult a licensed financial professional before acting on anything you read here.
Questions
Is the effective rate the same as the Fed's target?
No. The target is a range chosen by the committee; the effective rate is where overnight trades actually clear. It normally sits inside the range but is set by the market.
Why does the Fed change it?
To move inflation toward 2% and employment toward its maximum sustainable level. Raising it cools demand; cutting it supports demand. The lag between the move and the effect is long and variable.
How fast do savings rates follow?
More slowly than loan rates, and less completely. Online banks tend to pass through most of a hike within weeks; large branch banks often pass through far less.
Why is the latest reading locked?
The current level and the full history are free. Recent observations are reserved for members, who fund the daily data pipeline.