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Williams Pushes Back On Higher R* Estimates

FED
  • NY Fed’s Williams (voter) said in prepared remarks at a panel on R* that “the low r-star regime endures” according to macro model-based estimates as opposed to relying on financial market or survey data - see charts.
  • “This finding runs counter to recent commentary suggesting that r-star has risen due to persistent changes in the balance between the supply and demand for savings, such as higher investment in AI and renewable energy, as well as larger government debt. In fact, some measures of longer-run r-star have risen to levels well above those directly prior to the pandemic.”
  • He is of course though careful to warn that “the high degree of uncertainty about r-star means that one should not overly rely on estimates of r-star in determining the appropriate setting of monetary policy at a given point in time”.
  • Full comments here.


Source: NY Fed Williams presentation

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