What the Federal Funds Rate Is and How the Fed Sets It
The federal funds rate is the overnight rate at which banks lend reserves to one another. The Federal Open Market Committee (FOMC) does not set a single number; it sets a target range, currently 0.25 percentage points wide, and trading between banks settles inside that band.
Kevin Warsh is the Fed Chair as of the October 2026 press conference. Forward guidance has been minimal under Warsh, so the rate decision and the vote split carry most of the signal.
- Target range: 3.75%–4.00%
- Effective federal funds rate: 3.88% on Nov. 9, 2026 (New York Fed)
- Sept. 16, 2026: raised 25 bp to 3.75%–4.00% on a 12–0 vote
- Oct. 28, 2026: held at 3.75%–4.00% on a 10–2 vote; both dissenters wanted a hike
How to Find the Current Rate and When It Changes
The fastest free check is the FRED series DFEDTARU (upper limit) and DFEDTARL (lower limit) from the St. Louis Fed, which showed 4.00% on Nov. 12, 2026. The New York Fed publishes the effective rate, and the Federal Reserve's H.15 release carries both figures.
The FOMC meets about eight times a year but changes the range only when it votes to. The next decision is Dec. 9, 2026, with the meeting running Dec. 8–9.
- FRED DFEDTARU and DFEDTARL: target range limits
- New York Fed: effective federal funds rate
- Federal Reserve H.15 release: daily rate tables
- Next FOMC decision: Dec. 9, 2026
- December hike odds: about 85% per Wells Fargo Advisors (Nov. 3 citation); 71.6% per an FedWatch figure roughly 10 days old in a secondary source
- The two probabilities come from different sources and dates, so treat the spread as the signal, not either number
How a Rate Change Moves Stocks: Banks, Utilities, and Growth Names
CNBC's analysis holds that higher rates lower valuations, all else equal, but the rate direction alone does little to tell you what to own. Goldman Sachs found no clear relationship between rate levels and annual S&P 500 returns since 1940, though higher borrowing costs weigh on earnings.
The sector split is where rates show up in the data. Banks can gain from wider lending spreads while utilities and REITs carry more debt and compete with bond yields. The live Fintwit figures below show where the tracked names stand.
- JPMorgan Chase (JPM): $342.82, AI investment score 84, median price target $375.0, 0.4% of tracked X investors bought and 0.4% sold in 30 days
- Charles Schwab (SCHW): $91.72, score 82, median target $104.0, down 4.4% over 30 days, 0.0% of tracked investors bought and 0.4% sold
- NextEra Energy (NEE): $85.29, score 83, median target $91.0, up 9.0% over 30 days, X investor flow not available
- Realty Income (O): $59.26, score 82, median target $62.5, up 7.8% over 30 days, X investor flow not available
- SPDR S&P 500 ETF (SPY): $757.12, down 2.7% over 30 days, the broad market benchmark for rate sensitivity
Reading the Rate Against Inflation and the Yield Curve
October CPI rose 0.4% against a 0.3% forecast, and core CPI ran at a 3.7% annualized three-month pace, the highest in more than two years. That core pace sits just below the 3.88% effective rate, so the policy rate is barely above inflation on this measure.
The prime rate is conventionally about 3 percentage points above the top of the fed funds range, which puts it at 7.00% now, unchanged since the Sept. 16 hike. Compare the 2-year and 10-year Treasury yields on the Treasury's daily par yield curve page; the short end tracks the fed funds path most closely.
What the Current Rate Means for Your Portfolio Right Now
The current setting is a hold with a hike bias: two dissents on Oct. 28 favored tightening, and December hike odds were priced high in early November. Cash and short-term Treasuries now yield near the policy rate, while variable-rate debt costs track the 7.00% prime.
Check position sizing in rate-sensitive names before Dec. 9, and compare each stock's earnings growth against its valuation rather than relying on the rate alone. The Goldman Sachs finding is the reason the rate is one input, not the whole decision.
- Watch: Dec. 9, 2026 FOMC statement and vote split
- Watch: November CPI, the next read on the 3.7% core pace
- Watch: whether the 10–2 hold split widens to a hike in December
Frequently asked questions
- What is the current federal funds interest rate? The target range is 3.75%–4.00%, set Sept. 16, 2026 and held Oct. 28; the effective rate was 3.88% on Nov. 9, 2026.
- How often does the Fed change the federal funds rate? The FOMC meets about eight times a year but changes the range only when it votes to; recent moves were 25 bp.
- Does a higher federal funds rate mean stocks go down? Not automatically; higher rates lower valuations and raise borrowing costs, but Goldman Sachs found no clear link to annual S&P 500 returns since 1940.
- What is the difference between the fed funds rate and the prime rate? The fed funds rate is the interbank overnight target set by the FOMC, while the prime rate is a bank benchmark, now 7.00%, about 3 points above the fed funds upper bound.
- Where can I check the federal funds rate for free? Use FRED (DFEDTARU and DFEDTARL), the New York Fed for the effective rate, and the Federal Reserve's H.15 release; the WSJ publishes the prime rate.