robotraitor t1_iugtuee wrote on October 31, 2022 at 5:43 AM

fed chair powell stated in the QnA, of the sept. press briefing(5th question I think), that it would be necessary to raise to positive real interest rates in order to stop inflation.

Affectionate-Law1680 t1_iuh74un wrote on October 31, 2022 at 9:05 AM

Even better, every single TIP the us government has issued currently trades with a positive yield. Every last one has a positive real yield.

The market is telling OP they are an idiot, not some randos on the internet

why_rob_y t1_iuhacul wrote on October 31, 2022 at 9:54 AM

Right, but don't forget that as he raises rates, he'll be lowering inflation (with a bit of a lag). So rates don't need to go to 9+% or something.

Also, the quoted inflation rate you hear is an annual rate while the quoted rate you hear about the Fed raising is an overnight rate. It's apples and oranges to compare those numbers and JPow is likely looking at more direct comparisons (the forward 12 month rates vs the projected inflation rates for those periods).

Such-Wrongdoer-2198 t1_iui71s6 wrote on October 31, 2022 at 3:00 PM

True, but it's a dynamic system. Powell's statement doesn't mean that the peak Fed Rate must exceed the peak inflation rate. Just that the overnight rate must exceed inflation before equilibrium can be achieved. The Overnight rate may need to go up more, but inflation could also come down (it has).