The Federal Reserve’s current interest-rate stance may be more accommodative than policymakers generally believe when assessed against a medium-term estimate of the economy’s neutral interest rate, according to research published by the Federal Reserve Bank of San Francisco, Reuters reported.
The finding contrasts with the view of many U.S. central bank policymakers, who have generally assessed monetary policy as restrictive or close to neutral. It also differs from estimates of the longer-run neutral rate, which suggest that the Fed’s current benchmark interest-rate range of 3.50%-3.75% remains roughly half a percentage point above a neutral level.
