Why the Fed Can't Raise Interest Rates Above Inflation Rate, Today?
The Federal Reserve can’t raise the Fed funds rate above the inflation rate because the US productivity growth is too weak.
Net Domestic Investment to GDP is in a long-term downtrend and reduces productivity.
This makes it difficult to see the Fed funds rate exceed the inflation rate.
Watch this great animated video “How The Economic Machine Works.” Ray Dalio explains why, in the long run, productivity is what matters most.