The U.S. is relatively in line with other countries when comparing its inflation rate to its policy rate (i.e., the Fed Funds Rate).
United States
• Policy Rate (Midpoint): 4.3%
• Inflation Rate: 2.7%
• Policy rate is ~1.6x higher than inflation.All Other Countries (Average)
• Policy Rate: 2.1%
• Inflation Rate: 2.8%
• Policy rate is ~1.3x higher than inflation.
So, are U.S. policy rates really “too high”? In the context of inflation, not really.
Each dot compares a country’s inflation rate (X axis) with its policy rate (Y axis). The black trend line shows the general relationship across countries - higher inflation typically means higher rates.