9 Minute Read

Tackle Today: What History Says About Future Rate Hikes

September 20, 2022

By | No Comments

«The gap between inflation and interest rates must close.»


We are in a tightening cycle where the Federal Reserve is lifting interest rates to cool inflation. With last week’s CPI print showing price increases still running at 8.3%, investors wonder how high rates will need to rise before finally defeating the inflation monster.

The chart below provides some historical context to answer the question. It shows where the Fed Funds Rate peaked at the end of the past eight tightening cycles going back to 1974. While the absolute level of rates varied each time, one thing was consistent.

The Fed Funds Rate was always higher than the CPI at the end.

Does that mean the Fed Funds rate will top 8% this time!? Nope. But it does mean we have a ways to go before the two readings merge. My guess is that the CPI and Fed Funds Rate meet somewhere in the middle, say 4+%. The CPI makes its way down as rates continue their way up. Of course, this view is hardly unique. It’s what the market is currently pricing in.

Video Of The Day: Gino’s Gems – How Wide Do You Need To Do a Butterfly Spread?

In today’s Gino’s Gems, Coach Gino Poore talks about how far out-of-the-money and how wide you need a Butterfly Spread.

Chart of the Day – Fed Funds Rate and CPI: Is there a long way to go?

Chart of the Day - Fed Funds Rate and CPI: Is there a long way to go? (Source: Carson Investment Research)

After Wednesday’s meeting and the anticipated 75 basis point hike, the green bar will leap from 2.5% to 3.25%. We’ll have to wait for an updated CPI reading next month to see whether the blue bar has started to retreat.

Tales of a Technician

Naked Put & Bull Put Management Differences

Can you manage naked puts and bull puts the same? If not, what are the differences? Today’s video compares and contrasts how the trade management on the two might differ.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show 8:30 PM EST

This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Chart Modal

Tackle Trading

Book a FREE Consultation

Sign up for a free consultation to build your Educational Plan.