An Interest Rate Observation

Most commentary on rates focuses on when will the Fed stop raising, pause and then lower rates.   And what will be the new normal?  Will the markets ever see another ZIRP, zero interest rate policy?   What ever happened to Modern Economic Theory that deficits don’t matter?

Here is a recent observation from Michael Higgins a consultant for banks and credit unions:

Since the inception of Fed Funds Rate in 1954, the average is 4.60% and median is 4.16%. Today it’s 5.33% (Source: St Louis FRED). The recent decade was a statistical outlier. If you entered the industry after iPhone was introduced, this is how things used to be. As one expert noted to me, it’s going to be “normal” for longer.

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