Fed spokesperson: Speculation of rising neutral interest rate could delay Fed rate cuts
Golden Finance reported that Nick Timiraos, the "Fed Mouthpiece", wrote in his latest article that in the debate over whether and when the Fed will cut interest rates, another important debate is unfolding: where will interest rates go in the long run? The key to the problem lies in the neutral interest rate: the interest rate that can balance the supply and demand of savings while ensuring economic growth and inflation stability. The neutral interest rate is sometimes called "r*" or "r-star" and cannot be directly observed but can only be inferred. Every quarter, Fed officials predict long-term interest rates, which is actually their estimate of the neutral interest rate. Now some people believe that the neutral interest rate has reason to rise and has the potential to change a wide range of asset prices. Because the economy is strong and inflation is "weak."
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