by Calculated Risk on 2/12/2025 12:34:00 PM
Wednesday, February 12, 2025
Lawler: More Ruminations on the “Neutral” Rate of Interest
Today, in the Calculated Risk Real Estate Newsletter: Lawler: More Ruminations on the “Neutral” Rate of Interest
A brief excerpt:
When talking about the so-called “neutral” interest rate, many financial commentators, financial analysts, and even monetary policymakers talk about the nominal interest rate. However, the theoretical “neutral” interest rate is a real, or inflation-adjusted interest rate.There is much more in the article.
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In sum, (1) the market’s view of the neutral fed funds rate is higher than the majority of FOMC participants; and (2) using implied market expectations the current stance of monetary policy is not meaningfully restrictive.