IDEAS home Printed from https://ideas.repec.org/a/ags/illufd/358501.html
   My bibliography  Save this article

US Inflation and Interest Rates

Author

Listed:
  • Zulauf, Carl
  • Schnitkey, Gary

Abstract

In response to higher inflation, the Federal Reserve has raised the effective Federal Funds interest rate from 0.08% in January 2022 to 5.3% currently. It is now higher relative to current inflation than its historical average over the last 60 plus years. In contrast, market interest rates relative to inflation are lower than history suggests. The latter is consistent with the market’s view that post-2020 inflation is temporary. If the market’s view is correct, the Federal Reserve will begin to cut interest rates but market rates will likely decline less than the Federal Funds rate. If the market’s view is incorrect, market interest rates will need to move higher if inflation remains at or increases above its current level. The data in this article come from the Federal Reserve Economic Data files (FRED) maintained by the Federal Reserve Bank of St. Louis.

Suggested Citation

  • Zulauf, Carl & Schnitkey, Gary, 2025. "US Inflation and Interest Rates," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 14(105).
    • Handle: RePEc:ags:illufd:358501
    DOI: 10.22004/ag.econ.358501
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/358501/files/fdd060524.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.358501?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:illufd:358501. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/dauiuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.