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Fed funds rate

Fed funds rate is 3.9% and has held roughly steady over the last 3 months. That is high by historical standards: higher than 80% of readings since 2006.

Latest (latest reading)

3.9%

As of

Nov 12, 2026

3-month change

+25 bps

1-year change

+1 bps

20-year percentile

80th

20-year median

0.4%

Monthly averages, last 20 years. Shaded band = the middle half of readings.

What it is. The Fed's main policy rate; sets the cost of short-term money. A higher reading means more rate tightness in the Rates reading.

What it affects next

Fed funds rate is unusually high: 3.9%, 80th percentile of the last 20 years. Here is what has tended to follow, based on links the data backs up.

→3M Treasury bill yield: has tended to rise in the same month. Following
It is: +45 bps over 3 months. Link strength 0.98.
→Avg interest rate on federal debt: has tended to rise about 4 months later. Watch
If history repeats, watch for it around March 2027. Link strength 0.88.
→Yield curve (10Y minus 3M): has tended to fall in the same month. Not following yet
So far it is moving the other way (+1 bps over 3 months), which is worth watching. Link strength 0.84.
→2Y Treasury yield: has tended to rise in the same month. Following
It is: +71 bps over 3 months. Link strength 0.82.

What is driving it

←Core PCE price index is high, which has historically lined up with this indicator rising about 1 month later.
Link strength 0.44. The Fed targets 2% core PCE; persistent overshoots push rates higher.

All tested links

Fed funds ratedrives10Y Treasury yieldData agrees
The expected path of short rates feeds long rates, which also reflect growth and inflation expectations. Typical lag: days-months. Strongest match in the same period (correlation 0.52, 371 observations since 1996).
Fed funds ratepressuresLending standards, small firmsData agrees
Higher rates usually come with stricter loan terms. Typical lag: 1-3 quarters. Strongest match 5 quarters later (correlation 0.34, 119 observations since 1996).
Core PCE price indexdrivesFed funds rateData agrees
The Fed targets 2% core PCE; persistent overshoots push rates higher. Typical lag: months. Strongest match 1 month later (correlation 0.44, 369 observations since 1996).
Core CPIdrivesFed funds rateData agrees
Sticky core inflation keeps the Fed from cutting. Typical lag: months. Strongest match in the same period (correlation 0.36, 368 observations since 1996).
Fed funds rateraisesAvg interest rate on federal debtData agrees
As old debt rolls over, higher rates raise the government's interest bill. Typical lag: months-years. Strongest match 4 months later (correlation 0.88, 294 observations since 2002).
Fed funds ratepressuresYield curve (10Y minus 3M)Data agrees
Fed hikes lift short rates faster than long rates, flattening or inverting the curve. Typical lag: 0-6 months. Strongest match in the same period (correlation -0.84, 371 observations since 1996).
Fed funds ratedrives2Y Treasury yieldData agrees
The 2-year yield moves with where markets expect the Fed rate to be over the next two years. Typical lag: 0-3 months. Strongest match in the same period (correlation 0.82, 371 observations since 1996).
Fed funds ratedrives3M Treasury bill yieldData agrees
Short Treasury bills track the Fed's policy rate almost one-for-one. Typical lag: same month. Strongest match in the same period (correlation 0.98, 371 observations since 1996).

Source: Federal Reserve via FRED (series DFF).