MarketWatch/Greg Robb/7-19-2022
“Nobody knows what the terminal rate is going to be. We’re in an economy we’ve never seen before.” – Tim Duy, chief economist, SGH Macro Advisors
USAGOLD note: Though Duy has a point (these are unpredictable times), we see former Fed governor Larry Lindsay (also quoted in this article) as more in tune with what is required. He says the Fed will have to get the fed funds rate above the inflation rate before we have “significant disinflation.” That is in keeping with what we saw in the Volcker era. The following is self-explanatory. It shows the yawning gap between headline inflation and the current Fed funds rate.
US inflation rate and the Fed funds rate
Chart courtesy of TradingEconomics.com
