United States: Federal Funds Rate - Upper Limit

Macro

2026-07-30

Description

The Federal Funds Rate (FFR) in the United States is defined by a range with an upper and lower limit. The upper limit is typically represented by the Interest Rate on Reserve Balances (IORB), which is the rate paid by the Federal Reserve to commercial banks on their reserve balances held at the Fed.

Prior to 2020, the Federal Reserve differentiated between the Interest on Required Reserves (IORR) and the Interest on Excess Reserves (IOER). However, due to the impact of the COVID-19 pandemic in 2020, the Fed eliminated the reserve requirement. Since both the IOER and IORR rates were set at 0%, the Fed consolidated these two rates into a single rate, the IORB, in 2021.

Published by
Federal Reserve System (Choice)
Frequency
Monthly
Next Update

AI Data Insight

The US federal funds rate ceiling was maintained at 3.75% in the third quarter of 2026, flat with the previous figure and in line with market consensus. However, supported by sticky inflation and an AI capital expenditure boom, the July decision saw three dissenting votes advocating for a rate hike. With the new chairman abandoning forward guidance, market expectations for a resumption of tightening before year-end are rapidly rising.

AI Data Insight

The US federal funds rate ceiling was maintained at 3.75% in the third quarter of 2026, flat with the previous figure and in line with market consensus. However, supported by sticky inflation and an AI capital expenditure boom, the July decision saw three dissenting votes advocating for a rate hike. With the new chairman abandoning forward guidance, market expectations for a resumption of tightening before year-end are rapidly rising.

Description

The Federal Funds Rate (FFR) in the United States is defined by a range with an upper and lower limit. The upper limit is typically represented by the Interest Rate on Reserve Balances (IORB), which is the rate paid by the Federal Reserve to commercial banks on their reserve balances held at the Fed.

Prior to 2020, the Federal Reserve differentiated between the Interest on Required Reserves (IORR) and the Interest on Excess Reserves (IOER). However, due to the impact of the COVID-19 pandemic in 2020, the Fed eliminated the reserve requirement. Since both the IOER and IORR rates were set at 0%, the Fed consolidated these two rates into a single rate, the IORB, in 2021.

Published by
Federal Reserve System (Choice)
Frequency
Monthly
Next Update