The Fed Funds Rate in 2023

2023 month by month

The rate began 2023 at 4.5% and ended it at 5.5%. Along the way the Fed stepped it up in 4 of the year's months — a net increase of 1.00 points across the year. Its high was 5.5% and its low 4.5%. The chart above traces that path; hover any month to read the exact level.

What the Fed did in 2023, and why

The Fed pushed its benchmark to a 22-year high to bring inflation down, reaching a range topping out at 5.5%.

The Fed sets this rate to serve its "dual mandate" — stable prices and maximum employment. When inflation runs hot it raises the benchmark to cool borrowing and demand; when the economy weakens it cuts to encourage activity. In 2023 the rate averaged 5.23%, which makes the year the 2nd-highest of the 18 years on record. For context, the benchmark has averaged 1.55% across the whole 2009–2026 record and ran about 3.05% on average through the 2020s, so 2023 sat above its own decade.

2023: 5.23%

0.25% record low (January 2009) 5.5% modern high (July 2023)

What it meant for your money

The federal funds rate is the wholesale price of money, and it filters into almost every rate a household touches. When it sits high, as in 2023, the interest on credit cards, car loans and other variable-rate debt tends to be expensive, while the yield on savings accounts, CDs and money-market funds is more rewarding. Fixed mortgage rates take their cue more from long-term Treasury yields than from the Fed directly, but they generally drift in the same direction. You can see that year's home-loan cost in our mortgage-rate history for 2023.

The US in global context

The Fed wasn't acting in isolation. Entering 2023, the Bank of England held its headline rate near 3.43% and the European Central Bank near 2%, against the Federal Reserve's 4.5%. The levels differ — and each bank measures its rate slightly differently — but the world's major central banks tend to move through the same broad cycle, tightening and easing together as the same global forces of growth and inflation play out. To see the full three-way comparison over time, view the US/UK/Europe chart on the main study.

How 2023 compares

A year earlier, in 2022, the rate averaged 2.02% and ended at 4.5%. The following year, 2024, it averaged 5.27%. Set against today's 3.75%, 2023's 5.23% average was higher. The Fed sets only the short end of the interest-rate structure; see how the whole Treasury yield curve looked in 2023.

This is one year of the story. For the full picture — every month since 2009, the zero years, the great tightening, and the UK/Europe comparison — see the Federal Reserve interest rate history, 2009–today.