Why do you think that a Fed funds rate below the current inflation rate implies a negative real rate that is applicable to most participants in the economy and hence would be stimulative by “paying borrowers to borrow”?
(by the way, today’s Fed funds rate is about 3.75%, not 3%)
Participants in the economy - businesses and consumers - do not borrow at the Fed funds rate, they borrow at much higher rates (Current real interest rates)
In September, Powell said, when the Fed funds rate was 3.00%-3.25%, lower than today’s 3.75%-4.00%, “…we’ve just moved [the Fed funds rate] I think probably into the very lowest level of what might be restrictive…”
This means Powell and the Fed thought in September that current real rates, as experienced by participants in the economy, are most likely at least somewhat above 0%.
In November, Powell said “…I would say, as we come closer to that level, move more into restrictive territory…” and “…I think as we move now into restrictive territory…”
This means that Powell and the Fed think that we are already in a restrictive interest rate environment, and that rates are not stimulative.
Powell is saying the opposite of what you are saying. You are saying rates are stimulative, Powell and the Fed are saying rates are restrictive.
I’m inclined to treat the Fed’s view as expert opinion and it is backed by a small army of research economists. Beyond that, there is a ton of evidence now that inflation is lessening (housing purchase and rental markets, shipping trends, announced job cuts, inventories building, retailers reporting soft sales, discounting and weak outlooks, etc).
Also, what number would you use for a “current” inflation rate?
A trailing 12-month year-over-year rate is certainly not current in the sense of measuring how prices are changing right now - it’s the change in prices over the last 12 months. In contrast, the Fed funds rate is literally a current, short-term rate (as in overnight short-term).
Powell November (https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20221102.pdf)
Powell September (https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf)