Interesting Interest

With the latest hike in Fed funds rate to 2.125%, this is the first time in a decade the rate is equal or above the inflation rate; 2% as measured by PCE-core, the Fed’s preferred gauge. At this level, the rate remains expansionary/accommodative, but by 12/31/19 when it’s projected to be 2.875%, it’ll be neither expansionary nor contractionary; neutral. The economy is strong enough to do without much monetary assistance.