Open market operations--purchases and sales of U.S. Treasury and federal agency securities--are the Federal Reserve's principal tool for implementing monetary policy. The short-term objective for open market operations is specified by the
Federal Open Market Committee (FOMC). This objective can be a desired quantity of reserves or a desired price (the federal funds rate). The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
The Federal Reserve's objective for open market operations has varied over the years. During the 1980s, the focus gradually shifted toward attaining a specified level of the federal funds rate, a process that was largely complete by the end of the decade. Beginning in 1994, the FOMC began announcing changes in its policy stance, and in 1995 it began to explicitly state its target level for the federal funds rate. Since February 2000, the statement issued by the FOMC shortly after each of its meetings usually has included the Committee's assessment of the risks to the attainment of its long-run goals of price stability and sustainable economic growth.
For more information on open market operations, see the article in the Federal Reserve Bulletin (102 KB PDF).
Intended federal funds rate, Change (basis points) and Level
2008 | 2007 | 2006 | 2005 | 2004 | 2003 | Historical Archive
|
2008
|
|
December 16
|
...
|
75-100
|
0-0.25
|
|
October 29
|
...
|
50
|
1.00
|
|
October 8
|
...
|
50
|
1.50
|
|
April 30
|
...
|
25
|
2.00
|
|
March 18
|
...
|
75
|
2.25
|
|
January 30
|
...
|
50
|
3.00
|
|
January 22
|
...
|
75
|
3.50
|
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|
2007
|
|
December 11
|
...
|
25
|
4.25
|
|
October 31
|
...
|
25
|
4.50
|
|
September 18
|
...
|
50
|
4.75
|
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|
2006
|
|
June 29
|
25
|
...
|
5.25
|
|
May 10
|
25
|
...
|
5.00
|
|
March 28
|
25
|
...
|
4.75
|
|
January 31
|
25
|
...
|
4.50
|
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|
2005
|
|
December 13
|
25
|
...
|
4.25
|
|
November 1
|
25
|
...
|
4.00
|
|
September 20
|
25
|
...
|
3.75
|
|
August 9
|
25
|
...
|
3.50
|
|
June 30
|
25
|
...
|
3.25
|
|
May 3
|
25
|
...
|
3.00
|
|
March 22
|
25
|
...
|
2.75
|
|
February 2
|
25
|
...
|
2.50
|
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|
2004
|
|
December 14
|
25
|
...
|
2.25
|
|
November 10
|
25
|
...
|
2.00
|
|
September 21
|
25
|
...
|
1.75
|
|
August 10
|
25
|
...
|
1.50
|
|
June 30
|
25
|
...
|
1.25
|
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