2024-05-16 09:33

People expect the Fed to cut rates, because they are high. But interest rates are not high:

Graph showing the effective fed funds rate minus the CPI inflation rate since June of 1976

That’s the real fed funds rate going back to the month I graduated from high school. I’d say a real interest rate of 2.0% to 2.5% is more “normal” than the negative-to-zero rates we’ve had since 2007.

Philip Brewer @philipbrewer