The chart highlights why the FED is behind the curve
This chart highlights why the FED is behind the curve.
The recent 50 basis points cut was initially positive for markets, but assessing the Fed's monetary policy requires consideration of economic conditions.
A Fed Funds rate of 4.75% can be viewed as accommodative if the economy is growing rapidly, or restrictive if it is weakening
The chart compares FED Funds with US nominal growth trends, using core PCE and NBER's recession indicators.
The Fed's policy is still too tight. Historically, the Fed Funds rate is rarely sustained near or above nominal growth without signaling economic trouble.
The Fed needs to act more decisively to avoid falling further behind.
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https://x.com/SmartReversals/status/1839253744715727015
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