Real Fed Funds Rate

The Fed Funds Rate everyone quotes is the *nominal* rate — what banks pay each other overnight in dollars. But what actually drives economic decisions is the *real* rate — what the Fed is charging once you back out inflation (Core PCE here, the Fed's preferred measure). A 5% nominal rate when inflation is 4% is barely restrictive (1% real); a 5% nominal rate when inflation is 2% is severely restrictive (3% real). Same headline number, completely different effect. This card does that calculation for you so you can read the actual stance of policy, not the cosmetic level. When this number is solidly positive (above ~1.5%), the Fed is leaning against the economy; when it's negative, the Fed is supporting it. The 2008-2015 era of negative real rates is what fueled the post-GFC asset recovery; the 2022-2023 climb to +2% real is what froze housing, broke regional banks, and is the most direct reason recession risk is on the dashboard at all. Useful as the single cleanest read on Fed posture — when the Fed talks about being 'above neutral' or 'restrictive,' this is the number they're talking about. Pair with 5Y5Y Forward Inflation (long-run expectations) for the full Fed-stance picture: real rate tells you how tight policy is *now*, 5Y5Y tells you whether the market thinks the Fed will succeed in keeping it that way.