A 0% real equilibrium fed funds rate is significantly lower than the historical average of about 2% over the past century. It also is well under the future projections of FOMC members.
After Lehman brother’s shock, U.S federal reserved bank (a.k.a FRB) keep their interest rate 0% until this year. This historical low interest rate enhance cash flow internal the States and push people’s back to leap out from financial distractions for these 8 years.
Recently most investment and financial market concerned people highly focus on “When will Fed rise their interest rate up?” As a basic economics, total amount of money in the market is decreased when the pubic interest is high and if Fed rise their interest rate up, it cause strong US dollars.
However the situation is very fluid. Before FRB estimate their financial policy mainly with US statistics but they pay more attention to world economic recently. Due to that, the timing of interest up is elastic and Fed need to find the phase more carefully than before.
Strength of US dollar after whole country’s economic activity and we should keep monitoring that for build a plan or management.