Reported 7 months ago
The Federal Reserve Bank of New York released data indicating that the neutral interest rate, known as R-Star, remained at a low level of 0.7% in the first quarter of 2024, unchanged from the last quarter of 2023. This suggests a continuing environment of low interest rates, contrasting with Fed officials' expectations of a shift away from the era of extremely low borrowing costs prior to the pandemic. The latest Fed forecasts also show an increase in the longer-run federal funds rate target, indicating a possible rise in R-Star. Fed Chair Jerome Powell mentioned that R-Star is a theoretical concept and that the Fed's long-term rate forecast reflects an evolving view on interest rates. The article discusses the challenges faced by Fed officials in understanding the effects of monetary policy on the economy amidst the current economic conditions.
Source: YAHOO