U.S. Federal Funds Effective Rate and Target (1954-2022)

About this visualization

I (Richard Evans) created this plot to be a flexible and automatically updating time series plot of the U.S. federal funds effective rate (daily data) with a clear Federal Reserve target rate and target rate range. The target rate range, in particular, was valuable to have represented by a shaded region rather than just a minimum and maximum series as is presented in the data.

The federal funds rate is the interest rate that banks charge each other for overnight loans. Banks lend to each other on an overnight basis to meet reserve requirements on deposits set by the Federal Reserve. As such, the federal funds rate is an interest rate that is set by market interactions among thousands of banks each day and is not completely determined or controlled by the Federal Reserve. However, the Fed can manipulate this market by borrowing and lending in the overnight debt market of banks (see [Baughman and Caraplla, FEDS Notes, 2019]). This plot shows the effective federal funds rate as compared to its target rate.

In December 2008, after it was clear that the Fed was going to have to lower the fed funds rate to near zero as the Global Financial Crisis of was in full swing, the Fed moved from a policy of reporting a fed funds rate target to reporting a fed funds rate range with a lower bound and upper bound. From December 2008 to March 2022--with a brief interlude of slightly increased rates from December 2015 to March 2020--the lower bound of the federal funds rate target was 0.00% and the upper bound was 0.25%. This was the practical way to implement a near-zero federal funds rate, when that rate is market determined and cannot be below zero.

Functionality of the dynamic visualization

This dynamic visualization allows the user to customize some different views and manipulations of the data using the following functionalities.

• Highlight or mute specific recession time series by clicking on the series label in the legend on the right side of the plot. Even when muted, the time series are still faintly visible.
• Hovertool display is permanently selected and, therefore, not included in the option buttons on the left side of the plot. If you select hover over any data in the plot, a dialogue box will be displayed with the underlying data values at that point.
• Pan different areas of the data. If you click on the pan button on the left side of the plot, you can use your cursor to click and drag on the data window and change your view of the data.
• Zoom in or out on the data. You can zoom in or zoom out on the data series in three different ways. You can use the box zoom functionality by clicking on its button on the left side of the plot and clicking and dragging a box on the area of the plot that you want to zoom in on. You can also zoom in by clicking on the zoom in button on the left side of the plot, then clicking on the area of the plot you want to center your zoom in around. Or you can zoom out by clicking on the zoom out button on the left side of the plot, then clicking on the area of the plot you want to center your zoom out around.
• Save current view of data as .png file. You can save your current view of the data as a .png file to your local hard drive by clicking on the save button on the left side of the plot.
• Undo and redo actions. You can undo or redo any of the plot changes that you make using the undo button or the redo button on the left side of the plot.
• Reset the plot. After any changes you make to the plot, you can reset it to its original position by using the reset button on the left side of the plot.

Contributing to this visualization code

This dynamic visualization was created using the scripts written in the Python programming language. I used the Bokeh plotting library to create the JavaScript for the visualization. All of the scripts, data, and detailed documentation are available on the GitHub page for this visualization (https://github.com/OpenSourceEcon/FedFundsPlot). You can fork that repository and follow the instructions in the README.md to create and modify this visualization on your own machine. If you wish to improve or enhance this code or if you find errors or bugs, please consider the following ways to contribute to this project.

• Browse the repository Issues for known areas that need attention.
• Submit questions or suggestions by submitting a new issue in the repository Issues.
• Submit a pull request with your proposed changes.

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References

Evans, Richard W., “Plotting the time series of the effective federal funds rate and its target in Python,” https://github.com/OpenSourceEcon/FedFundsPlot, (Jul. 29, 2022).