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Waller - Various Financing Pressures May Push R* Higher In Coming Years

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Fed Governor Waller (voter) switches from shorter-term aspects of monetary policy with a thorough discussion on factors affecting r*.

  • “I believe the factors increasing demand that I just reviewed have outstripped the increase in supply over the past few decades, leaving r* lower.” [We can't cover all the factors here but see the full remarks here]
  • “But if the growth in the supply of U.S. Treasuries begins to outstrip demand, this will mean lower prices and higher yields, which will put upward pressure on r*.”
  • “It is probably not news to many people that the U.S. is on an unsustainable fiscal path. The latest outlook from the Congressional Budget Office paints a challenging picture of the future, with debt expected to grow at an unprecedentedly high rate for an economy at full employment and not involved in a major war.”
  • “All of these financing pressures may contribute to a rise in r* in coming years, but only time will tell how large a factor the U.S. fiscal position will be in affecting r*.”
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Fed Governor Waller (voter) switches from shorter-term aspects of monetary policy with a thorough discussion on factors affecting r*.

  • “I believe the factors increasing demand that I just reviewed have outstripped the increase in supply over the past few decades, leaving r* lower.” [We can't cover all the factors here but see the full remarks here]
  • “But if the growth in the supply of U.S. Treasuries begins to outstrip demand, this will mean lower prices and higher yields, which will put upward pressure on r*.”
  • “It is probably not news to many people that the U.S. is on an unsustainable fiscal path. The latest outlook from the Congressional Budget Office paints a challenging picture of the future, with debt expected to grow at an unprecedentedly high rate for an economy at full employment and not involved in a major war.”
  • “All of these financing pressures may contribute to a rise in r* in coming years, but only time will tell how large a factor the U.S. fiscal position will be in affecting r*.”