The Fed’s NIRP Policy (Real Fed Funds Rate Remains Negative)

This is a syndicated repost courtesy of Online Course Notes For Financial Markets and Banking. To view original, click here. Reposted with permission.

On the one hand, The Federal Reserve has been raising its target rate (upper bound) in recent years, from 25 basis points (Dec ’15) to 200 basis points today.

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But if we subtract inflation (CPI YoY) from the target rate, we see that The Fed is still practicing a NEGATIVE REAL RATE Policy (NIRP).

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