Current Fed Interest Rate: The Latest Target Range

The Federal Reserve’s federal funds target range is 3.50% to 3.75%, effective after the Federal Open Market Committee’s October 28–29, 2026 meeting. The midpoint is 3.625%; this is a target for the federal funds rate, not a rate that every consumer or business pays.

Formula

This calculator illustrates simple interest using the entered annualized rate and a hypothetical $10,000 balance. It does not calculate the Federal Reserve’s target range or predict what a bank will charge. The result is:

• Interest = $10,000 × (annual rate ÷ 100) × time in years.
• Equivalent monthly rate = annual rate ÷ 12.

Here, annual rate is the user-entered federal funds rate in percent per year; time is the period in years; interest is a dollar amount. The monthly figure is the annual rate divided by 12, expressed as a percentage. It is a simple conversion, not an effective annual yield or a quoted consumer-loan APR.

Worked Example

Using the defaults, the annual rate is 3.625% and the period is one year:

1. Convert the percentage to a decimal: 3.625 ÷ 100 = 0.03625.
2. Multiply the hypothetical balance by the decimal rate and time: $10,000 × 0.03625 × 1 = $362.50.
3. Divide the annual percentage by 12 for the monthly equivalent: 3.625 ÷ 12 = 0.3021% per month, rounded to four decimal places.

The example is a simplified illustration, not the earnings or cost of an actual deposit or loan. Actual products may use different rates, compounding conventions, fees, and terms.

Assumptions

• The calculator uses a fixed annualized input for the entire period, although real policy rates can change.
• Interest is calculated as simple interest on a constant hypothetical balance; no payment timing or balance changes are modelled.
• The monthly equivalent is the annual percentage divided by 12, not monthly compounding.
• The example excludes fees, taxes, insurance, and other account or borrowing terms.

What the Fed rate means

The federal funds rate is the interest rate at which eligible depository institutions lend reserve balances to one another overnight. The Federal Reserve’s Federal Open Market Committee (FOMC) sets a target range to guide that market rate. The New York Fed’s market operations help keep the effective federal funds rate within the target range; the effective rate is a measured market rate, rather than the committee’s target itself.

That distinction explains why a headline may give two numbers, such as 3.50%–3.75%, while a calculator or market report may show one. The range is the Fed’s policy target. The effective rate is a single daily measure of transactions. The range’s midpoint, 3.625% in this example, is a convenient reference, but it is not necessarily the rate observed in the market on a particular day.

The Federal Reserve is the U.S. central bank. Its monetary-policy decisions are intended to support its congressionally assigned goals of maximum employment and stable prices. The FOMC reviews economic conditions and risks when deciding whether to raise, lower, or maintain its target range.

How the rate affects borrowing and savings

The federal funds rate is not a direct setting for mortgages, auto loans, credit cards, or savings accounts. It can influence broader short-term financing costs and financial conditions, and lenders may respond to those conditions. But the link is indirect: customer rates also depend on product terms, lender pricing, market yields, credit risk, and other factors.

• Variable-rate borrowing: Some products are tied to a benchmark that can move as market rates change. The product’s own terms determine how and when a rate adjustment occurs.
• Fixed-rate borrowing: A fixed rate does not automatically change whenever the Fed announces a new target. Market expectations and longer-term yields can affect the pricing of new fixed-rate loans.
• Savings: Deposit rates may move in response to competition and market conditions, but banks set their own offerings; the policy target does not guarantee a particular savings yield.

For example, a 0.25 percentage-point policy change does not mean that every borrower’s monthly payment changes by the same amount or at the same time. A fixed-rate loan’s scheduled rate may remain unchanged, while a variable-rate product may adjust according to its contract and reset schedule.

Why the rate changes

At scheduled meetings, the FOMC weighs a broad set of information, including inflation, employment, economic activity, and financial conditions. Policy operates with lags: a decision can influence financing conditions before its full effects show up in household spending, hiring, or price data. That is one reason the committee considers both observed data and risks to its outlook rather than reacting mechanically to one report.

When inflation pressures are judged too strong, a higher target can help restrain demand by making some borrowing more expensive. When economic conditions weaken, a lower target can support demand by easing short-term financing conditions. These are general channels, not a promise that a particular rate move will produce a specific result. Future decisions are uncertain, and no single announcement guarantees the path of consumer rates or inflation.

How to check the latest official rate

Because the target can change at an FOMC meeting, check an official Federal Reserve release for the current range rather than relying on a dated article, calculator default, or search snippet. The Federal Reserve publishes post-meeting statements, and the New York Fed publishes the effective federal funds rate. Those sources answer related but different questions: the target range is the committee’s policy setting; the effective rate is a market observation.

When checking a reported number, note its date and whether it describes the target range, the range midpoint, or the effective rate. Also distinguish the federal funds rate from the discount rate, which is a separate rate associated with Federal Reserve lending to eligible institutions.

Frequently Asked Questions

What is the current Fed interest rate?
The target range stated here is 3.50% to 3.75%, effective after the October 28–29, 2026 FOMC meeting. Check the Federal Reserve’s latest statement to verify whether a later decision has changed it.

Is the federal funds rate the same as the prime rate?
No. The federal funds rate is an overnight interbank market rate guided by an FOMC target. The prime rate is a separate benchmark used by financial institutions; they are related through broader market conditions but are not identical.

Does a Fed rate cut lower my mortgage rate?
Not necessarily. Existing fixed-rate mortgages generally do not reset just because the target changes. New mortgage rates can respond to longer-term market yields and other pricing factors, so they may move differently from the federal funds rate.

Where can I find the effective federal funds rate?
The New York Fed publishes the effective rate as a daily market measure. The Federal Reserve’s FOMC statements are the primary source for the target range.

How often does the Fed change its target?
The FOMC holds regularly scheduled meetings during the year and can change or maintain the range at a meeting. The schedule does not mean the rate changes every meeting; the committee’s decision depends on its assessment of conditions.

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in rate | Federal funds rate (annualized) | % | 3.625 | 0.01 | 100
in years | Time period | years | 1 | 0.0833 | 50
out interest | Simple interest on a hypothetical balance | $ | 10000 * (rate / 100) * years | 2
out monthly | Equivalent monthly rate | % | rate / 12 | 4