Fed officials voted unanimously to lift their benchmark federal-funds rate to a range between 3% and 3.25%, a level last seen in early 2008. Nearly all of them expect to raise rates to between 4% and 4.5% by the end of this year, according to new projections released Wednesday, which would call for sizable rate increases at policy meetings in November and December.
– The Wall Street Journal
Inflation sits at 8%, out of sight on this graph. So that interest rate number of 3.00-3.25 (the little circle) still needs to go up, and go up rapidly. Eventually, after all the crises in the world have subsided enough, we want a real interest rate of oh, 2%, 3% (nominal interest rate minus inflation). How in earth will we ever get there? (Brutal answer: By the Fed raising rates until they have killed the strong demand for goods and services and probably by putting people out of work in the process).
