US Interest Rates
The current Fed funds rate is 5.33% as of 2024-07-24. You can find the latest US interest rates analytics and data on MacroVar.
| Fed Funds rate | 5.33% |
| SOFR rate | 5.33% |
| SOFR 30-Day Average | 5.35% |
| SOFR 90-Day Average | 5.36% |
| SOFR 180-Day Average | 5.39% |
| LIBOR 3 Months | 5.54% |
| LIBOR 6 Months | 5.56% |
| Prime rate | 8.5% |
| 2-Year | 4.46% |
| 10-Year | 4.25% |
| 30-Year | 4.48% |
US Interest Rates Chart
US interest rates interpretation
When the US economy is strong and inflation expectations are rising the market is expecting central banks to raise rates in order to decelerate economic and inflation expectations. Short-term interest rates like the Fed Funds are linked to the macroeconomic environment, fiscal and monetary policies and the financial markets (commodities).Hence, short term interest rates should be expected to rise and their related futures which are the 3-month Fed Funds futures should sell off (note: implied interest rate for futures is calculated as 100 minus the futures price). At the same time and since markets are interrelated, fixed income markets are linked the Yield Curve (10-year minus 3-month). The Yield curve steepens when growth expectations are rising and flattens when growth falls (MacroVar monitors all macroeconomic and financial factors which are leading indicators of growth expectations).
When central banks set rates correctly, we should expect smooth slope implied curve in the short term interest rate futures markets.
Highly sloping implied rate curves imply that the central bank reacted too late, the economy has overheated causing inflationary pressures and the futures markets imply aggressive interest rate hikes.
An Inverted implied rate curve implies that the central bank reacted too late, hence has to be more aggressive in order to combat inflation pressures, causing the business cycle to shorten, a possible recession due to early fast hikes and interest rate cuts later on to combat an impeding recession.
The Federal reserves's FOMC meetings affect these markets to a large extent. When the FED becomes more hawkish (tendency to raise rates) or dovish by either adjusting interest rates and/or use QE/QT, it affects the Short-term interest rates futures markets directly.
When the US 2-year bond yield which is determined by market forces falls below the FED refinancing rate it implies the market expects FED to cut interest rates in the short-term future in order to boost the economy which is currently weak.
What are US Interest Rates
US Interest rates are a critical aspect of the U.S. economy, influencing everything from borrowing costs to investment decisions. The Federal Reserve, the central banking system of the United States, plays a key role in determining interest rates.The federal funds rate is a crucial benchmark. It's the interest rate at which banks lend to each other overnight. The Federal Reserve sets a target range for this rate, influencing short-term interest rates throughout the economy.
When the economy is strong, the Fed may raise interest rates to prevent inflation. Higher rates make borrowing more expensive, slowing spending and investment. Conversely, during economic downturns, the Fed might lower rates to stimulate borrowing and spending.
Mortgage rates, credit card rates, and other consumer interest rates often follow the lead of the federal funds rate. Investors also watch interest rates closely, as they impact the returns on various investments.
It's a delicate balancing act for the Federal Reserve, aiming to promote economic growth while keeping inflation in check. Monitoring interest rate trends is essential for anyone involved in financial planning, investing, or economic analysis.