@WendyBG
The Fed funds rate is a current, overnight, or 1-day, rate. The change in CPI you are using is a trailing 12 month, or 365-day, year-over-year rate.
Why does it make sense to subtract a lagging, backward-looking 12-month inflation measure from a current, present-day 1-day rate?
I’ve never understood this: Lagging and 12-month compared with current and 1-day, different term lengths, different epochs
Why does it make sense to do this?
If you are saying banks borrowed at the Fed funds and then invested in some asset over some future term, should not the appropriate measures be:
(expected rate of return of asset of over future term)
minus
(expected forward inflation rate over same future term)
?
Similar to how a forward inflation rate is implied by TIPS and Treasury prices?
you keep posting about the real Fed funds rate calculated in this way and I keep asking about it, like an infinite loop, lol
real > what real > real > what real > … >