Since mid-2021, inflation has been running well above the 2% target set by the Federal Open Market Committee (FOMC).1 In an effort to put downward pressure on inflation, in March 2022 the FOMC began a series of increases to the federal funds rate (i.e., the policy rate), with the aim of making monetary policy “sufficiently restrictive” to return inflation to 2% over time, as noted in several of the committee’s post-meeting statements since November. The current range for the federal funds rate stands at 5%-5.25% following the increase at the May FOMC meeting. How can we know if the policy rate is at a level that ... (full story)