Is The Federal Post-Judgment Interest Rate Variable: Yes & No

• Published date: 13 November 2023
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Steptoe & Johnson
• Author: Mr Michael Baratz, Steven Davidson and Molly Bruder Fox

First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. This month we focus on the federal post-judgment interest rate, which is set by statute, see 28 U.S.C. ' 1961. Clients often ask if the federal post-judgment interest rate is variable or fixed. The post-judgment interest rate is variable in that it is based on the weekly average 1-year constant maturity (nominal) Treasury yield, as published by the Federal Reserve System. But is it adjustable or static over the tenure of the judgment? These questions become even more prominent given that the federal rate has experienced two dramatic "U" curves in the last 15 years from the financial crisis of 2008 to the COVID-19 pandemic in 2020 to inflation currently. What if a judgment were entered immediately post-2008, remains unsatisfied, and the current post-judgment interest rate is approximately five times higher (or 50,000 basis points more) than it was at the date of the judgment . . . are you stuck with the lower 2008 rate? The answer is "yes"'the post-judgment interest rate is fixed as of the date the judgment is entered until satisfied, accruing at a single rate for the duration of the outstanding judgment.

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Post-judgment interest rates are established by 28 U.S.C.A. ' 1961, which provides as follows:

a) Interest shall be allowed on any money judgment in a civil case recovered in a district court. . . . Such interest shall be calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment. . . .

b) Interest shall be computed daily to the...