Over the last 40 years, the federal funds rate—the rate at which the Federal Reserve lends money—moved with the federal deficit. Sometimes it moved in lockstep. As the federal funds rate generally declined from its historical high in the early eighties, budget deficits grew more negative through the mid-1990s.
Deficit Follows Federal Funds Rate Since 1980
Deficit Follows Federal Funds Rate Since 1980
Deficit Follows Federal Funds Rate Since 1980
Over the last 40 years, the federal funds rate—the rate at which the Federal Reserve lends money—moved with the federal deficit. Sometimes it moved in lockstep. As the federal funds rate generally declined from its historical high in the early eighties, budget deficits grew more negative through the mid-1990s.