Fed’s interest rates were expansionary until 2022 and strongly contractionary thereafter: Estimates of the neutral federal funds rate and the actual (effective) federal funds rate, 2018–present
| Neutral Federal Funds Rate | Effective Federal Funds Rate | |
|---|---|---|
| Jan-2017 | 3.23% | 0.70% |
| Apr-2017 | 3.15% | 0.95% |
| Jul-2017 | 3.18% | 1.15% |
| Oct-2017 | 3.37% | 1.20% |
| Jan-2018 | 3.50% | 1.45% |
| Apr-2018 | 3.49% | 1.74% |
| Jul-2018 | 3.42% | 1.92% |
| Oct-2018 | 3.39% | 2.22% |
| Jan-2019 | 3.41% | 2.40% |
| Apr-2019 | 3.55% | 2.40% |
| Jul-2019 | 3.64% | 2.19% |
| Oct-2019 | 3.62% | 1.64% |
| Jan-2020 | 3.59% | 1.26% |
| Apr-2020 | 3.55% | 0.06% |
| Jul-2020 | 3.61% | 0.09% |
| Oct-2020 | 3.60% | 0.09% |
| Jan-2021 | 3.72% | 0.08% |
| Apr-2021 | 3.81% | 0.07% |
| Jul-2021 | 3.80% | 0.09% |
| Oct-2021 | 4.05% | 0.08% |
| Jan-2022 | 3.76% | 0.12% |
| Apr-2022 | 3.46% | 0.77% |
| Jul-2022 | 3.60% | 2.19% |
| Oct-2022 | 3.55% | 3.65% |
| Jan-2023 | 3.54% | 4.52% |
| Apr-2023 | 3.38% | 4.99% |
| Jul-2023 | 3.27% | 5.26% |
| Oct-2023 | 3.16% | 5.33% |
| Jan-2024 | 3.23% | 5.33% |
| Apr-2024 | 3.22% | 5.33% |
Note: Estimates of the neutral federal funds rate from the Federal Reserve Bank of New York: https://www.newyorkfed.org/research/policy/rstar. The effective federal funds rate was downloaded from the Federal Reserve Economic Database (FRED) of the Federal Reserve Bank of St Louis. The neutral federal funds rate in the chart is the estimate from the New York Federal Reserve plus 2% to account for the Fed’s inflation targeting.
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