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Waller: Some Thoughts on r*: Why Did It Fall and Will It Rise?
Thank you for the invitation to be here and speak to you today.1 I want to step away from shorter-term questions about the economic outlook and monetary policy to delve into a subject of longer-term significance—r*. While there are many concepts of r*, I interpret it to be the real policy interest rate that is neither stimulating nor restricting economic activity with inflation anchored at the central bank's inflation target. In the short term, policymakers must judge whether a given policy setting is restrictive or otherwise, and while this judgment is made with some idea of r*, a number of factors can influence ... (full story)
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<=USD>:*WALLER: ONLY TIME WILL TELL HOW IMPORTANT FISCAL WILL BE FOR R*
— Cable FX Macro (@cablefxmacro) May 24, 2024
*WALLER: FINANCING PRESSURES MAY PUSH R* HIGHER IN COMING YEARS
*WALLER: HELPFUL TO LOOK AT REAL 10Y YIELD FOR MARKET VIEW ON R*
*WALLER: FACTORS THAT LOWERED NEUTRAL RATE MAY REVERSE IN FUTURE