Federal Reserve: The Coming Zero Interest Rate Economy

The US Federal Reserve seems to be having a hard time trying to manage its short term rates even as they have now began paying depository institutions higher interest rates on its excess balances held at the central bank.

Casey Research: Fed Funds Rate vis-à-vis Fed Funds Actual Effective

The chart courtesy of Casey Research shows that the Fed Fund rates are at 1.5% but Fed Funds Actual Effective rate have been trading below 1%.

Nonetheless, given the slump across global markets last week, it does seem that the Fed could probably be following the market’s action as it has mostly done and cut rates in the next meeting.

The US is right on track to a zero interest rate policy economy.