Now go back to Q2 when inflation was running at 10 percent annualized in the quarter and the Fed funds rate was averaging about 0.50 percent. If you accept the above assumptions are reasonable, then it's quite possible the real rate of interest (defined by Fed funds minus CPI) will have swung from about negative 10 percent to positive 4 percent. Volcker took rates from minus 4 percent to positive 10 percent. The CPI also rose straight through this period. There wasn't a peak and reversal in prices as is happening now, technically Powell's swing in real rates won't seem as impressive as Volcker's looking at the 12-month CPI, but the reversal in real rates from Q2 to Q4 will be even more dramatic when one considers the economy could see a double-digit down swing down in the CPI. Impressive.
Friday: Personal Income and Outlays, PCE Prices, Fed Chair Powell
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All US markets will be closed in observance of *Good Friday*.
[image: Mortgage Rates] Note: Mortgage rates are from MortgageNewsDaily.com
and are for top t...
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