Real Cash Rate

Federal Funds Rate minus year-over-year CPI inflation — the real return on holding cash. Positive = policy is genuinely restrictive (cash earns above inflation); negative = policy is accommodative. The real cash rate was deeply negative (-6%) during the 2021–22 inflation surge, then turned sharply positive above +2.5% in 2023–24, the most restrictive real rate since the Volcker era. The transition from negative to positive real rates is historically the trigger for credit stress and economic slowdown.

This indicator is computed by MacroLab from two FRED series: FEDFUNDS minus CPIAUCSL (YoY). Both input series are sourced from the Federal Reserve Economic Data (FRED) database.