The Federal Open Market Committee (FOMC) met again on April 28 and 29 but, as expected, declined to cut the federal funds rate. On Monday, the CME's Rate Watch platform put the odds of no movement at 100%.
The Fed has held the target rate at a range of 3.50% to 3.75% since December 2025.
Rate adjustments determine how much interest banks charge each other for maintaining reserves. That, in turn, impacts interest rates on credit cards, personal loans, auto financing and more.
When will interest rates go down?
The FOMC meets eight times a year to consider changes to the federal funds rate. The next meeting is June 16 and 17, although many economists don't expect a cut before late 2026 or even later.
While a March "dot plot" suggested one cut might occur in October 2026, many experts now believe reductions will be delayed until at least December or even into 2027.
June 16–17
July 28–29
Sept. 15–16
Oct. 27–28
Dec. 8–9
What happens when the Fed cuts its rate?
The federal funds rate determines the interest rate banks charge each other when borrowing or lending excess reserves. It's the central bank's primary tool for influencing the economy.
When the Federal Reserve lowers its target rate, borrowing generally becomes cheaper. After several cuts, interest rates on credit cards, auto loans and personal loans can decline noticeably. That often spurs consumers to apply for new loans or refinancing.
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Mortgage rates are not immune to rate cuts or increases, but they are more closely linked to 10-year Treasury bond yields.
Rate cuts also influence what savers earn: When banks adjust returns to reflect a lower rate environment, yields on CDs, high-yield savings accounts and money market accounts often fall.
Conversely, if the Fed raises rates, CDs and HYSAs become more attractive to savers.
Interest rates FAQ
What is the federal funds rate?
The federal funds rate is the target interest rate set by the Federal Reserve. It dictates the interest that commercial banks charge each other to lend extra reserves overnight. That, in turn, impacts the rates these institutions charge for credit cards, loans and other financial products.
When will interest rates go down again?
The next Federal Open Market Committee meeting is April 28 and 29, 2026. However, experts forecast the next rate cut for the second half of 2026, potentially in June.
How does the federal funds rate affect inflation?
The Federal Reserve attempts to curb inflation by raising the benchmark interest rate, thereby raising borrowing costs and discouraging consumer spending. That can prompt retailers to slow price increases in order to retain customers.
Ideally, overall inflation subsides and the economy slows down. However, slower economic activity can lead to rising unemployment or even a recession. When that appears to be a concern, the Federal Reserve may lower its target rate to boost the economy.
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