I’m Chris Anstey, an economics editor in Boston, and today we’re looking at the debate over the “neutral” interest rate. Send us feedback and tips to ecodaily@bloomberg.net. And if you aren’t yet signed up to receive this newsletter, you can do so here.
It might be said there are two types of approaches to setting monetary policy. One involves absorbing incoming data, judging the likely trajectory for things like inflation, unemployment and growth, and making your best call. Another takes all of that on board, but puts a premium on a benchmark reference point: the neutral interest rate.