July 10, 2024 14:54 GMT
MNI BRIEF: Fed's Powell Says Short-Run Neutral Rate Higher
Fed Chair testifies before the House of Representatives on Capitol Hill.
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MNI (WASHINGTON) - Federal Reserve Chair Jerome Powell said Wednesday the short-term neutral rate that neither stimulates or slows the economy likely moved higher.
"Clearly interest rates, the neutral interest rate, must have moved up at least in the short term," he said, adding that policy is restrictive nonetheless. (See MNI INTERVIEW: Fed Will Stay Patient On Rocky Road To 2%-Evans)
There is widespread debate within the central bank over whether a higher neutral rate means policy might be less restrictive than some policymakers think. The Fed recently revised up its view of the long-run neutral rate in its June Summary of Economic Projections.
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