*EPF208 03/20/01
Fact Sheet: Federal Funds for April 1992-March 2001
(Increases/Decreases over last decade) (280)

The more important of the two short-term interest rates that the Federal Reserve controls is the federal funds rate, which is what banks charge each other on overnight loans.

The Federal Reserve does not precisely set the federal funds rate. Instead the policy-making Federal Open Market Committee (FOMC) sets a "target" federal funds rate and then instructs the Federal Reserve Bank of New York to either buy or sell Treasury bonds to achieve the "target." The buying of Treasury bonds helps to increase liquidity in the monetary system, reducing interest rates, while the selling of the bonds increases interest rates.

The following table shows the changes in interest rate targets from 1992 through the March 20, 2001, rate cut:

Intended federal funds
Date Increase Decrease Rate after change

2001

March 20 .50 5.0

January 31 .50 5.5

January 3 .50 6.0

2000

May 16 .50 6.5

March 21 .25 6.0

February 2 .25 5.75

1999

November 16 .25 5.50

August 24 .25 5.25

June 30 .25 5.00

1998

November 17 .25 4.75

October 15 .25 5.00

September 29 .25 5.25

1997

March 25 .25 5.50

1996

January 31 .25 5.25

1995

December 19 .25 5.50

July 6 .25 5.75

February 1 .50 6.00

1994

November 15 .75 5.50

August 16 .50 4.75

May 17 .50 4.25

April 18 .25 3.75

March 22 .25 3.50

February 4 .25 3.25

1992

September 4 .25 3.00

July 2 .25 3.75

April 9 .50 3.25

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
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