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Shown below are the Federal Reserve's two major policy-related interest rates - the ones it directly sets - adjusted for inflation. The first is the discount rate - what it charges banks for direct short-term loans. In practice, discount window borrowing is rare, undertaken usually in urgency. But it is an important symbolic rate, a major way policy is telegraphed to the markets. Second is the fed funds rate - the rate banks charge each other for overnight loans; the tightness or slackness of that market is under the Fed's control. The fed funds market only began in the mid-1950s, but the discount rate goes back to 1919.
Periods of extended negative real policy rates are fairly rare: notably, the 1930s and early 1940s, periods of depression followed by war, and the 1970s, when inflation was on the rise. During the depression, rates were kept low to stimulate a sick economy and prices were falling. During the war, rates were kept low to hold down the costs of financing the war, even though prices were rising. And it's likely in the 1970s that the rise in inflation took everyone by surprise, so rates never rose enough to reflect it. That, and hints of generalized social crisis - Third World rebellion, oil shocks, and wildcat strikes. And they've just gone negative again - a short dip, or a hint of deflation?
Real rates = nominal rates less annual change in consumer price index.
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