Federal Funds Rate History: A Guide to the Past 36 Years

💡 The Federal Reserve has raised interest rates 14 times since 1990, with significant implications for investors.

The Federal Reserve delivered a hawkish surprise on Wednesday, signaling that interest rate cuts remain further away than markets had hoped. Fed Chair Jerome Powell told reporters that the central bank needs 'greater confidence' that inflation is sustainably declining before it will consider easing policy.

The 10-year Treasury yield surged to 4.8% in the aftermath, its highest level since October 2023. $TLT fell sharply as bond traders repriced the timing of the first cut from March to June.

Fed Signals Rates Higher for Longer

Powell's comments represent a significant shift from December's dovish pivot, which had led investors to believe that the Fed might cut rates as early as the first quarter of 2024. Instead, the central bank signaled that it would keep rates elevated for longer, citing concerns about inflation and a still-strong labor market.

Rate Hikes Since 1990

Since 1990, the Federal Reserve has raised interest rates 14 times, with the most significant hikes occurring between 1994 and 1995, and again between 2004 and 2006. These rate hikes have had a significant impact on the economy, slowing down growth and reducing inflation.

The Impact of Rate Hikes on Stocks

Historically, rate hikes have had a negative impact on stocks, particularly those in the technology and consumer discretionary sectors. Companies with high levels of debt or those that rely heavily on borrowing to fund their operations tend to be disproportionately affected by rate hikes.

What It Means for Investors