The line in black shows what the effective Federal Funds rate has been. The line in red is what the Fed thinks the effective Federal Funds rate will be over the longer term.
A stopped analog clock is exactly right twice per day. No idea why I mention it.
They expect the fed funds rate to bottom at 2.5% while stating that they plan to keep it at 0% until at least 2022. Maybe they are expecting to change our expectations more than telling us their own.
ReplyDeleteThe captain expects our submarine to survive 250 basis points again, but only if it is in dry dock until at least 2022 undergoing much needed repairs?
ReplyDeleteWorld War II German U-boats generally had collapse depths in the range of 200 to 280 metres (660 to 920 feet). - Wikipedia
Is this what the Fed intended when it tried to change my expectations? Das Boot? ;)
Sentiment is a funny thing. It can hang on long past all rational expectation, and then change with brutal force.
ReplyDeleteDas Boot? Let's roll a few more trillion-dollar depth charges off the fantail.
ReplyDeleteHere is secret footage of the Fed calmly discussing 280 basis points. Note that they are all in complete agreement. 280 is too much.
ReplyDelete