Long, slow decline in long-run neutral real rate of interest: Inflation-adjusted federal funds rate, 1979—2017
| Quarter | Federal funds rate (FFR), quarterly | FFR, 5-year average |
|---|---|---|
| 1979Q1 | 3.30 | |
| 1979Q2 | 2.93 | |
| 1979Q3 | 3.58 | |
| 1979Q4 | 5.91 | |
| 1980Q1 | 6.23 | |
| 1980Q2 | 3.83 | |
| 1980Q3 | 0.57 | |
| 1980Q4 | 6.20 | |
| 1981Q1 | 7.16 | |
| 1981Q2 | 8.74 | |
| 1981Q3 | 8.96 | |
| 1981Q4 | 5.67 | |
| 1982Q1 | 7.13 | |
| 1982Q2 | 7.97 | |
| 1982Q3 | 4.71 | |
| 1982Q4 | 3.37 | |
| 1983Q1 | 2.82 | |
| 1983Q2 | 3.56 | |
| 1983Q3 | 4.30 | |
| 1983Q4 | 4.89 | |
| 1984Q1 | 5.52 | |
| 1984Q2 | 5.98 | 5.15 |
| 1984Q3 | 7.41 | 5.34 |
| 1984Q4 | 5.38 | 5.45 |
| 1985Q1 | 4.20 | 5.48 |
| 1985Q2 | 3.91 | 5.39 |
| 1985Q3 | 3.79 | 5.28 |
| 1985Q4 | 4.01 | 5.28 |
| 1986Q1 | 4.04 | 5.44 |
| 1986Q2 | 3.38 | 5.31 |
| 1986Q3 | 3.06 | 5.13 |
| 1986Q4 | 3.02 | 4.87 |
| 1987Q1 | 3.44 | 4.62 |
| 1987Q2 | 3.57 | 4.52 |
| 1987Q3 | 3.54 | 4.36 |
| 1987Q4 | 3.38 | 4.15 |
| 1988Q1 | 2.78 | 4.06 |
| 1988Q2 | 3.02 | 4.05 |
| 1988Q3 | 3.56 | 4.08 |
| 1988Q4 | 3.98 | 4.10 |
| 1989Q1 | 4.84 | 4.12 |
| 1989Q2 | 5.46 | 4.15 |
| 1989Q3 | 5.26 | 4.14 |
| 1989Q4 | 4.99 | 4.09 |
| 1990Q1 | 4.56 | 3.96 |
| 1990Q2 | 4.33 | 3.91 |
| 1990Q3 | 3.96 | 3.90 |
| 1990Q4 | 3.62 | 3.89 |
| 1991Q1 | 2.60 | 3.84 |
| 1991Q2 | 2.39 | 3.76 |
| 1991Q3 | 2.27 | 3.68 |
| 1991Q4 | 1.50 | 3.60 |
| 1992Q1 | 0.80 | 3.49 |
| 1992Q2 | 0.61 | 3.38 |
| 1992Q3 | 0.41 | 3.25 |
| 1992Q4 | 0.22 | 3.09 |
| 1993Q1 | 0.29 | 2.95 |
| 1993Q2 | 0.19 | 2.80 |
| 1993Q3 | 0.28 | 2.69 |
| 1993Q4 | 0.44 | 2.57 |
| 1994Q1 | 0.91 | 2.45 |
| 1994Q2 | 1.73 | 2.35 |
| 1994Q3 | 2.29 | 2.23 |
| 1994Q4 | 2.97 | 2.12 |
| 1995Q1 | 3.55 | 2.04 |
| 1995Q2 | 3.85 | 1.99 |
| 1995Q3 | 3.72 | 1.95 |
| 1995Q4 | 3.65 | 1.92 |
| 1996Q1 | 3.40 | 1.90 |
| 1996Q2 | 3.39 | 1.88 |
| 1996Q3 | 3.47 | 1.92 |
| 1996Q4 | 3.38 | 1.97 |
| 1997Q1 | 3.39 | 2.02 |
| 1997Q2 | 3.58 | 2.11 |
| 1997Q3 | 3.82 | 2.25 |
| 1997Q4 | 4.06 | 2.41 |
| 1998Q1 | 4.18 | 2.58 |
| 1998Q2 | 4.38 | 2.77 |
| 1998Q3 | 4.28 | 2.95 |
| 1998Q4 | 3.62 | 3.11 |
| 1999Q1 | 3.44 | 3.25 |
| 1999Q2 | 3.46 | 3.39 |
| 1999Q3 | 3.80 | 3.52 |
| 1999Q4 | 3.87 | 3.62 |
| 2000Q1 | 4.01 | 3.69 |
| 2000Q2 | 4.58 | 3.77 |
| 2000Q3 | 4.72 | 3.82 |
| 2000Q4 | 4.64 | 3.86 |
| 2001Q1 | 3.75 | 3.86 |
| 2001Q2 | 2.42 | 3.80 |
| 2001Q3 | 1.77 | 3.73 |
| 2001Q4 | 0.37 | 3.59 |
| 2002Q1 | 0.25 | 3.44 |
| 2002Q2 | 0.08 | 3.29 |
| 2002Q3 | -0.17 | 3.13 |
| 2002Q4 | -0.31 | 2.96 |
| 2003Q1 | -0.45 | 2.76 |
| 2003Q2 | -0.23 | 2.57 |
| 2003Q3 | -0.35 | 2.36 |
| 2003Q4 | -0.37 | 2.14 |
| 2004Q1 | -0.67 | 1.92 |
| 2004Q2 | -0.91 | 1.71 |
| 2004Q3 | -0.54 | 1.53 |
| 2004Q4 | -0.14 | 1.37 |
| 2005Q1 | 0.28 | 1.21 |
| 2005Q2 | 0.82 | 1.07 |
| 2005Q3 | 1.39 | 0.95 |
| 2005Q4 | 1.72 | 0.82 |
| 2006Q1 | 2.33 | 0.71 |
| 2006Q2 | 2.64 | 0.62 |
| 2006Q3 | 2.86 | 0.58 |
| 2006Q4 | 3.09 | 0.61 |
| 2007Q1 | 2.90 | 0.66 |
| 2007Q2 | 3.21 | 0.79 |
| 2007Q3 | 3.08 | 0.92 |
| 2007Q4 | 2.25 | 1.02 |
| 2008Q1 | 1.07 | 1.08 |
| 2008Q2 | -0.18 | 1.08 |
| 2008Q3 | -0.29 | 1.09 |
| 2008Q4 | -1.13 | 1.05 |
| 2009Q1 | -1.00 | 1.02 |
| 2009Q2 | -0.98 | 0.99 |
| 2009Q3 | -0.83 | 0.98 |
| 2009Q4 | -1.30 | 0.97 |
| 2010Q1 | -1.42 | 0.93 |
| 2010Q2 | -1.14 | 0.88 |
| 2010Q3 | -1.10 | 0.82 |
| 2010Q4 | -0.78 | 0.75 |
| 2011Q1 | -0.89 | 0.64 |
| 2011Q2 | -1.31 | 0.50 |
| 2011Q3 | -1.58 | 0.33 |
| 2011Q4 | -1.79 | 0.12 |
| 2012Q1 | -1.99 | -0.10 |
| 2012Q2 | -1.80 | -0.32 |
| 2012Q3 | -1.61 | -0.52 |
| 2012Q4 | -1.62 | -0.74 |
| 2013Q1 | -1.49 | -0.95 |
| 2013Q2 | -1.32 | -1.11 |
| 2013Q3 | -1.40 | -1.22 |
| 2013Q4 | -1.40 | -1.28 |
| 2014Q1 | -1.41 | -1.33 |
| 2014Q2 | -1.62 | -1.35 |
| 2014Q3 | -1.64 | -1.38 |
| 2014Q4 | -1.47 | -1.40 |
| 2015Q1 | -1.33 | -1.43 |
| 2015Q2 | -1.25 | -1.43 |
| 2015Q3 | -1.21 | -1.42 |
| 2015Q4 | -1.21 | -1.42 |
| 2016Q1 | -1.25 | -1.43 |
| 2016Q2 | -1.24 | -1.45 |
| 2016Q3 | -1.29 | -1.46 |
| 2016Q4 | -1.27 | -1.46 |
| 2017Q1 | -1.01 | -1.44 |
Notes: The quarterly effective federal funds rate is from the Federal Reserve Bank of St. Louis FRED database, accessed May 20, 2017. Inflation is measured as a change in the core price deflator for personal consumption expenditures (PCE minus food and energy) measured against the same quarter in the previous year. Core PCE price data are from the National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA), Table 2.4. The actual real federal funds rate line is just the effective rate minus the inflation rate. The other line is a 5-year moving average of the inflation-adjusted rate.
Source: Author's analysis of Federal Reserve Bank of St.Louis and Bureau of Economic Analysis (BEA) National Income and Product Accounts (NIPA) data series