Why the Fed Is Watching Real Rates More Than Headline CPI

The Federal Reserve Podcast with Fexingo: Interest Rates, FOMC Meetings, and Monetary Policy · Jul 9, 2026 · 8m · transcript

In this episode of The Federal Reserve Podcast, Lucas and Luna break down why the Fed is increasingly focused on real interest rates — the nominal rate minus inflation — rather than headline CPI. With the ten-year breakeven inflation rate stuck at 2.25 percent and the ten-year Treasury yield at 4.53 percent, the real yield sits at roughly 2.3 percent, a level that historically has been restrictive. We look at how this metric influences the central bank's thinking, why it matters for the July FOMC meeting, and what the latest PCE and CPI data say about whether policy is actually tight…