U.S. Federal Reserve Rate and Solar Activity (1955-2022): Proof of Strong Correlations

Abstract

The report uses a methodological approach founded by W. S. Jevons and A. L. Chizhevsky. The years of solar cycles were numbered according to the order established in the astrophysics of the Sun, grouped and compared with the arithmetic averages of the effective rates for US federal funds. Grouping statistical data by serial numbers of years of solar activity cycles made it possible to construct a function of effective rates on federal funds (dependent variable) and serial numbers of years of the average solar activity cycle (independent variable) with correlation coefficients on its four segments close to 1 (0.99499269, -0.998464195, 0.986985363, -0.996221106).

This function allows you to predict the values of the effective rate on US federal funds in the next years. It follows that in 2023 this rate will increase to 1.996%.

Keywords: Effective federal funds rate, solar activity cycles, Wolf numbers, US Federal Reserve rate

JEL Classification: G1