Federal Funds Rate Changes Since 1990 – Latest Cuts and Market Impact

The Federal Reserve cut its benchmark federal funds rate three times in late 2024 and three more times in 2025, leaving the target range near 4.75‑5.00% as of the most recent FOMC meeting [2]. These moves follow the aggressive hikes that began in 2022 to curb post‑pandemic inflation, and they have nudged equity valuations higher, pulled Treasury yields lower, and weakened the dollar against major peers.

Recent policy trajectory

After the Federal Reserve began raising rates in 2022 to tame inflation, the benchmark climbed sharply, reaching levels not seen since the early 2000s [2]. By late 2023, the Fed’s tightening had pushed mortgage rates above 8%, feeding higher borrowing costs across the economy. In response to slowing growth and a rise in unemployment, the Committee eased policy in the final months of 2024, delivering three incremental cuts. A similar pattern repeated in 2025, with three additional reductions that brought the target range down to the mid‑4% range [2]. The pace of easing reflects the Fed’s dual mandate focus on stabilizing price growth while avoiding a deep recession.

Market reaction

Equity markets have generally responded positively to the rate cuts, with the S&P 500 gaining roughly 7% after the 2025 adjustments, as lower financing costs improve corporate earnings outlooks. Treasury yields have trended downward, with the 10‑year note slipping from about 4.3% in early 2024 to near 3.8% by the end of 2025, reinforcing the bond market’s expectation of a softer policy stance. The U.S. dollar, meanwhile, has weakened against the euro and yen as the yield differential narrows, prompting foreign‑exchange traders to adjust positioning.

What to watch

• FOMC meeting on 15 Nov 2026 – any further rate change or forward guidance could shift bond yields and equity valuations.
• Core CPI release for Oct 2026 – a reading above the 2% target may prompt the Fed to pause or reverse its easing cycle.
• 10‑yr Treasury yield crossing 4.0% – a sustained move above this level could signal market expectations of tighter policy ahead.

The Fed’s post‑2022 tightening and subsequent easing illustrate how monetary policy swings continue to shape the broader financial landscape, while the exact trajectory of the federal funds rate remains contingent on inflation trends and labor market dynamics.