The Fed Funds Rate…minus inflation … equals the “real interest rate.”
In the modern US there are not many examples of negative real interest rates. It is typically considered an extreme pro-inflationary measure to be used only in the extreme short term.
Not so for this Fed. As Noble-winning lefty economist Paul Krugman noted last year, the Fed’s steering committee is a non-diverse echo-chamber of like-minded ideologues. The US has had negative real interest rates off-and on (mostly on) since the dot.com bubble burst and the towers fell.
It is not surprising that the Fed “got it wrong,” economics is not an exact science. But the Fed consistently “gets it wrong” on the same side. Throw a hundred darts, when all of them wind up left-of-center it is not a coincidence.
From the article
The core personal-consumption expenditures price index, also known as the core PCE deflator, rose 4.7% year over year in January, up from 4.4% in December and higher than the 4.3% growth economists surveyed by FactSet had expected. The increase in core PCE for December, initially reported as 4.4%, was revised to 4.6%, showing price growth at the end of last year was hotter than previously thought.