Real Rates

At present, the Fed funds rate is 5.375% and the Fed’s preferred inflation measure is 2.6%, making the real Fed funds rate, Fed funds minus inflation, 2.775%. Dating back to 1954, the median real Fed funds rate has been 2.8% when the Fed starts cutting rates after a rate rising cycle. Moreover, inflation continues to fall. This suggests rate cuts are not far off, certainly in June, maybe in May.