RESTRICTIVE RATES
07/30/2024 |
When the Fed began raising rates in 3/22, Fed funds was 0.125% and the CPI was 8.5%, thus the real Fed funds rate was a very stimulative negative 8.375%. Today Fed funds is 5.375% and the CPI is 3%. Thus, the real Fed funds rate is a restrictive 2.375%. This means the rise in real Fed funds rate is 10.75 percentage points, more than when Paul Volker was Fed Head.