The Fed is looking to hike multiple times this year, but the real fed funds rate - the fed funds rate minus median CPI - is still at about -1.0% (chart here).
In the past the real fed funds rate followed the market cycle - it went up as the markets went up, and fell when the markets fell. But the number is still sitting below zero as the markets have risen over the past 8 years.
Anyone using this as an indicator? My guess is that this is just the manifestation of secular stagnation - we're going to be in this territory for awhile, because how high can the Fed realistically raise rates without breaking the fragile economic growth?
On a side note, if banks are going to take real losses on deposits, they're going to have to make that up elsewhere. Like all those fun fees that we all love.
Submitted April 27, 2017 at 06:39AM by TheMacroEvent http://ift.tt/2poTVS7
