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MNI's Jean Yung Asks About Real Rates Getting Into Positive Territory


Last Q to MNI's Jean Yung, who asks about real rates getting into positive territory, and how restrictive 4.6% next year is:

  • A: Let's assume we do get to that level, which is likely. You adjust that for some forward looknig measure of inflation. You'll get a positive number. In all cases you will get fwd inflation expectations in the short term that will be significantly less [than the Funds rate].
  • So you'll have a positive funds rate at that point, which could be 1% or so. I don't know exactly when it would be, but it would be significantly positive when we get to that level. We've written down what we think is a plausible path. The path that we actually execute will be enough. It will be enough to restore price stability.
  • And we're going to continue to watch incoming data and the evolving outlook and ask ourselves whether our policy is in the right place, wherever we go.

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