Yes the fed rate should be much closer to the inflation rate. For the most part, the fed rate has been higher than inflation. At least up until we lost our minds in 2008.
Year Inflation Rate YOY4 Fed Funds Rate*5
1954 -0.70% 1.25%
1955 0.40% 2.50%
1956 3.00% 3.00%
1957 2.90% 3.00%
1958 1.80% 2.50%
1959 1.70% 4.00%
1960 1.40% 2.00%
1961 0.70% 2.25%
1962 1.30% 3.00%
1963 1.60% 3.50%
1964 1.00% 3.75%
1965 1.90% 4.25%
1966 3.50% 5.50%
1967 3.00% 4.50%
1968 4.70% 6.00%
1969 6.20% 9.00%
1970 5.60% 5.00%
1971 3.30% 5.00%
1972 3.40% 5.75%
1973 8.70% 9.00%
1974 12.30% 8.00%
1975 6.90% 4.75%
1976 4.90% 4.75%
1977 6.70% 6.50%
1978 9.00% 10.00%
1979 13.30% 12.00%
1980 12.50% 18.00%
1981 8.90% 12.00%
1982 3.80% 8.50%
1983 3.80% 9.25%
1984 3.90% 8.25%
1985 3.80% 7.75%
1986 1.10% 6.00%
1987 4.40% 6.75%
1988 4.40% 9.75%
1989 4.60% 8.25%
1990 6.10% 7.00%
1991 3.10% 4.00%
1992 2.90% 3.00%
1993 2.70% 3.00%
1994 2.70% 5.50%
1995 2.50% 5.50%
1996 3.30% 5.25%
1997 1.70% 5.50%
1998 1.60% 4.75%
1999 2.70% 5.50%
2000 3.40% 6.50%
2001 1.60% 1.75%
2002 2.40% 1.25%
2003 1.90% 1.00%
2004 3.30% 2.25%
2005 3.40% 4.25%
2006 2.50% 5.25%
2007 4.10% 4.25%
2008 0.10% 0.25%
2009 2.70% 0.25%
2010 1.50% 0.25%
2011 3.00% 0.25%
2012 1.70% 0.25%
2013 1.50% 0.25%
2014 0.80% 0.25%
2015 0.70% 0.50%
2016 2.10% 0.75%
2017 2.10% 1.50%
2018 1.90% 2.50%
2019 2.30% 1.75%
2020 1.40% 0.25%
2021 7.00% 0.25%
2022 9.10% 2.50%
2023 2.7% (est.) 2.8% (est.)
2024 2.3% (est.) 2.8% (est.)