Some perspective on growth, inflation and the Fed funds rate …

by Douglas Cliggott

In January 2024, the consumer price index, excluding food and energy – a measure of so-called “core” inflation – was 3.87 percent higher that it was 12 months ago (blue line below). The current Fed funds interest rate, the Federal Reserve’s primary policy interest rate, was (and still is) 5.33 percent (red line below). The difference between these two numbers is 1.46 percentage points, or 146 basis points. Is 146 basis points a lot, or a little?

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