Fed Funds Rate History
The federal funds rate has ranged from nearly 20% in 1981 (when Paul Volcker broke the back of inflation) to 0-0.25% in the aftermath of the 2008 and 2020 crises. Understanding this history reveals how the Fed uses monetary policy as its primary tool for managing the economy.
Fed Funds Rate
3.64%
Federal Reserve
Key historical moments: The rate hit 20% in June 1981 as Volcker aggressively fought double-digit inflation. It was cut to 1% after the dot-com bust (2001-2004), contributing to the housing bubble. After 2008, rates sat near zero for 7 years (ZIRP). COVID brought another zero-rate period in 2020-2022, before the most aggressive tightening cycle since Volcker: 525 basis points of hikes in just 14 months (2022-2023).
? Frequently Asked Questions
What was the highest the fed funds rate has ever been?
The federal funds rate peaked at 20% in June 1981 under Fed Chair Paul Volcker, who was determined to break inflation that had reached 14% in 1980.
How long did zero interest rates last?
Near-zero rates (0-0.25%) were maintained for approximately 7 years after the 2008 crisis (2008-2015), and again from March 2020 to March 2022 during COVID.
How fast did the Fed raise rates in 2022-2023?
The Fed raised rates by 525 basis points (5.25 percentage points) over 14 months — from 0-0.25% in March 2022 to 5.25-5.50% by July 2023 — the fastest tightening cycle since Volcker.
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