Monetary policy is now tight, so growth will slow
REAL FEDERAL FUND RATE
8.5
0 1 2 3 4 5 6 7 8 9
0 1 2 3 4 5 6 7 8 9
† LAUBACH -WILLIAMS ESTIMATE. * TARGET/CEILING RATE DEFLATED BY CLEVELAND FED EXPECTED 5 YEAR CPI. PRE-1982 FUND RATE DEFLATED BY 5 YEARS TRAILING CPI.
7.2
5.5
5.3
REAL FED FUND TARGET*
3.5
3.5
2.9
NEUTRAL RATE†
0.9
-2 -1
-2 -1
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
1
Sources: Federal Reserve, BLS, Cleveland Fed, New York Fed, NBER
33
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