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Economic Commentary

Assessing Real Interest Rates

Since the late 1970s, the Federal Open Market Committee (FOMC) of the Federal Reserve System has set ranges for growth of money and debt at the beginning of each year, as required by the Humphrey-Hawkins Act. These ranges are reconsidered at the FOMC’s July meeting, where preliminary ranges are chosen for the next calendar year. Monetary targets were intended not only as policy guides, but also as a means to communicate the thrust of monetary policy to others—particularly in regard to its long-term intentions. For example, in the 1980s the FOMC sought to slow trend money growth in order to reduce the inflation rate over time. Financial markets have thus paid a great deal of attention to monetary targets.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Carlstrom, Charles T. 1993. “Assessing Real Interest Rates.” Federal Reserve Bank of Cleveland, Economic Commentary 8/15/1993.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International