Rates
The Fed funds rate, Treasury yields, the dot plot and the yield curve
Interest Rates
Fed funds rate and 10-year yield
Fed Funds Rate
3.75%
1 wk
↑ +0.12%
1 mo
↑ +0.12%
1 yr
↓ -0.47%
10-Year Treasury Yield
5.10%
1 wk
↓ -0.12%
1 mo
↑ +0.10%
1 yr
↑ +1.05%
30-Year Treasury Yield
5.43%
1 wk
↓ -0.17%
1 mo
↑ +0.07%
1 yr
↑ +0.79%
Source: FRED
FOMC Dot Plot — Fed funds rate projections
Source: FOMC (September 16, 2026)
Notes
- What is happening
- The Fed raised the funds rate 25 basis points on 16 September to 3.75–4.00%, its first hike since 2023, unwinding part of the 2025 cuts; the 10-year yield is 5.22% (8 October), its highest since 2007, the 30-year 5.60%, its highest since 2002, and the 30-year mortgage rate 7.40%.
- Why it matters
- Long rates, not the policy rate, set mortgages, corporate borrowing and the government's interest bill; a Fed forced to reverse course while the long end keeps rising has lost part of its grip.
- What's driving it
- Sticky inflation above 3% (CPI 3.4% in August), deficit financing, and a term premium rebuilt as foreign buyers step back.
- What to watch
- The dot plot below, updated in September, puts the median at 4.1% for end-2026, with 12 of 18 participants at 4.125% and 16 of 18 above today's range: one more hike this year is the base case; September's CPI (14 October) and the 27–28 October meeting are the next tests.
Neutral Rate and Policy Stance
Where the policy rate sits against the rate that neither stimulates nor restrains — the FOMC's own longer-run estimate, since FRED carries no r*
Real policy rate (fed funds less core PCE inflation)
0.62%
1 mo
↓ -0.02%
1 yr
↓ -0.86%
FOMC longer-run projection, median
3.20%
1 yr
↑ +0.20%
Policy stance (real rate less neutral)
-0.58%
Real policy rate against the neutral real rate
Source: Federal Reserve, BEA and FOMC, via FRED
Fed funds against the FOMC's longer-run projection
Source: Federal Reserve and FOMC, via FRED
Real interest rates, Cleveland Fed estimates
Source: Cleveland Fed, via FRED
Inflation expectations
Source: Cleveland Fed and St. Louis Fed, via FRED
Notes
- What is happening
- The effective policy rate was 3.63% in August against core PCE inflation of 3.0% (revised down from 3.3% by the BEA's annual update): a real rate of about 0.6%. The 16 September hike lifts the range to 3.75–4.00%, a real rate near 0.9% at the midpoint. The FOMC now puts the longer-run neutral rate at 3.2% (3.1% in June), 1.2% in real terms; policy is therefore still accommodative on this measure, by about 0.5 points on the August reading and 0.3 points after the hike.
- Why it matters
- What matters is not the level of the rate but its distance from neutral, the rate that neither stimulates nor restrains. A Fed that believes itself restrictive but sits below neutral lets inflation run.
- What's driving it
- The 2025 rate cuts while core inflation climbed back above 3%; the FOMC has raised its neutral estimate from 2.5% in 2019 to 3.2%, conceding that deficits and AI investment have lifted the equilibrium rate.
- What to watch
- A real rate back above 1.2%, through inflation falling or further hikes (the September dots pencil in one), would be a return to restrictive policy; the Cleveland Fed's 1-year real rate, at 1.7% in September, says the market does not see policy as accommodative.
Yield Curve
US Treasury yields by maturity — current vs. a selectable past period
Source: FRED
Notes
- What is happening
- After 27 months inverted, the longest on record, the curve had steepened; the September hike narrowed the gap to 25 basis points, and October has reopened it from the long end: the 10-year at 5.24% (9 October) yields 44 basis points more than the 2-year at 4.80%.
- Why it matters
- The slope is the market's read on growth and policy; a steepening led by the long end says something different from a flattening led by the Fed.
- What's driving it
- A bear steepener first — long yields rose on term premium, debt and inflation worries — then a flattening from the front after the Fed's hike, and since late September a second bear steepener: the 2-year has barely moved while the 10-year added 20 basis points and the term premium crossed 1%.
- What to watch
- Whether the 2-year keeps climbing towards the 10-year (a re-inversion would say the market thinks the Fed is going too far) or the 30-year resumes rising (fiscal-style steepening): the same curve, opposite messages.