Former Treasury secretary Summers: Neutral Fed Rate ‘Much Higher’
Says economy may be re-accelerating
The neutral rate is the theoretical level for the Fed’s benchmark that neither stimulates nor restrains growth.
Fed policymakers last month estimated it at around 2.6% — the median estimate of their forecasts.
Summers reiterated his own view is that neutral is 4% or higher. That compares with the current target range of 5.25% to 5.5%.
“There’s a slight element of restriction, but only a slight one”
Summers: “There’s no way to judge what policy is without knowing what would be a neutral policy,”
Bloomberg 5 April 2024
What’s the Fed’s ‘Neutral’ Rate and Why Does It Matter?
Kommentarer