Fed Rate Higher for Longer

 

Source: Federal Reserve Data

Now, look at the chart again. This time, notice that when inflation (again, in red) spikes, the Fed Funds rate (in blue) has had to climb above the CPI spike in order to rein it in.

Reminder…

The current Fed Funds target range is 4.50% - 4.75% and the latest Consumer Price Index reading is 6.4%.

If Druckenmiller is right that “once inflation goes above 5%, it has never come back down without the Fed Funds Rate exceeding the CPI,” then I’d ask bulls to answer why this time is different.