United States · Cycle layer · Indicator

Real policy rate

+1.30 %
Watch crossed, with the policy rate no higher than 6 months ago · tightening
As of Aug 2026 · Threshold > 10-yr mean + 1 pp, and rising
Recession, Dec 2007 to Jun 2009Recession, Feb 2020 to Apr 2020−6−4−202Threshold > 10-yr mean + 1 pp, and risingTrigger > 10-yr mean + 1 pp, and rising201020122014201620182020202220242026
2008 to 2026 · percent. Shaded bands are NBER recessions, peak to trough.
What it is

The policy rate minus core CPI inflation over the past year, read at the end of each month: how hard monetary policy is braking. The threshold is the series' own ten-year mean plus one point, so each region has a baseline that fits its history and nothing is estimated. It triggers only while the policy rate is also higher than six months earlier; above the level with rates on hold or falling it is on Watch.

Threshold source: worldstat.us construction: the real rate a point above its ten-year mean while the policy rate is higher than six months earlier. How thresholds are chosen

Known weaknesses

A worldstat.us rule with no published track record. The ten-year mean includes the zero-rate years, which lowers the baseline everywhere. Core CPI runs above the core PCE measure the Federal Reserve targets, so the real rate here is a little lower than the Fed's own.