The issue is where is neutral? At this 'late' stage of the cycle it used to be north of 4.5%. These chaps should explain their opinion about the huge drop in short rates this time around. US policies are dragging down global demand and US potential GDP so are drivers of neutral cash rate.
Atlanta Fed's Bostic: Fed should proceed to neutral rate
Atlanta Federal Reserve bank president Raphael Bostic on Thursday said he felt the Fed should continue raising rates towards a “neutral” level, noting that despite recent market volatility and increasing uncertainty, he did not see “any indications of a material weakening in the macroeconomic data at the moment.” “We’re within shouting distance of neutral, and I do think neutral is where we want to be,” Bostic said, highlighting his concern that unemployment at its current low level could produce an overheated economy and inflationary pressure down the road. Though there are few signs of that yet, he said it was hard to make such a judgment ... (full story)
- Posted: Dec 6, 2018 2:21pm
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