ChainCatcher news, according to Jinshi reports, Federal Reserve's Musalem stated that he believes the risks of loosening policy too much and too quickly outweigh the risks of loosening too little. There is uncertainty regarding the neutral interest rate, which may be between 3% and 4%. The Federal Reserve's policy rate is currently well above the neutral level.

ChainCatcher news, according to Jinshi reports, Chicago Federal Reserve President Austan Goolsbee and Federal Reserve Governor Michelle Bowman expressed sharply different views on the theoretical neutral interest rate level, which is the interest rate that balances the Federal Reserve's various economic goals.Goolsbee emphasized that the Federal Reserve still needs to lower interest rates further to reach this level—he described this rate as "far below where we currently are."In contrast, Bowman stated, "We may be closer to a neutral policy stance than we currently think." Will Compernolle of FHN Financial pointed out that given the range of neutral interest rates estimated anonymously by Federal Reserve officials in September's forecast was between 2.375% and 3.75%, such a divergence is not surprising.

ChainCatcher news, in this week's speech, Chicago Fed President Austan Goolsbee and Federal Reserve Governor Michelle Bowman expressed starkly different views on the theoretical neutral interest rate level. The neutral interest rate refers to the rate level that allows the Fed's various economic goals to be balanced.Goolsbee emphasized that the Fed still needs to lower interest rates further to reach this level—he described this rate as "far below where we currently are." Meanwhile, Bowman stated, "We may be closer to a neutral policy stance than we currently think." Will Compernolle of FHN Financial pointed out that given the range of neutral interest rates estimated anonymously by Fed officials in September's forecast was between 2.375% and 3.75%, such a divergence is not surprising.

ChainCatcher news, according to Jinshi reports, Federal Reserve's Barkin stated that the Federal Reserve will have to feel its way toward a neutral interest rate, depending on whether inflation stabilizes. There may be more cost pressures in the future, and adopting a prudent approach is advisable.

ChainCatcher message, Federal Reserve Chairman Powell: As we approach the neutral interest rate, it may be necessary to slow the pace of rate cuts.

ChainCatcher news, Nick Timiraos recently wrote that amid the debate over whether and when the Federal Reserve will cut interest rates, another important discussion is unfolding: where will interest rates go in the long term? The key to the issue lies in the neutral interest rate: the rate that balances the supply and demand for savings while ensuring economic growth and stable inflation. The neutral interest rate is sometimes referred to as "r*" or "r-star," and it cannot be directly observed but can only be inferred. Each quarter, Federal Reserve officials forecast long-term interest rates, which is essentially their estimate of the neutral interest rate. Some now believe there is reason for the neutral interest rate to rise, potentially altering a wide range of asset prices, as the economy is strong and inflation is "lackluster."However, the current debate over the neutral interest rate may not have any short-term impact on the Federal Reserve, as current rates are above nearly all estimates of the neutral interest rate. This means that current rates are suppressing economic growth and price increases, and future nominal rates are more likely to decline rather than rise. If the U.S. economy continues to remain strong while inflation remains stubborn, it could trigger market speculation about a rise in the neutral interest rate, leading to the belief that current rates are not as restrictive. From this perspective, the Federal Reserve has even less reason to cut rates.Another scenario is that if inflation resumes its downward trend, discussions about the neutral interest rate will shift focus to the extent of the Federal Reserve's subsequent rate cuts. Nick states that there is no doubt the Federal Reserve wants to "normalize policy," but to what extent will they "normalize"? They will not stay at the 5% level, but they also will not continuously drop to 2.5%. They (might) feel more comfortable stopping in the range of 3% or 4%, but there is no conclusion yet. Interest rate futures indicate that the Federal Reserve funds rate will stabilize around 4% in the coming years.