US Bureau of Labor Statistics (BLS) CPI report

Powell Signals Higher Neutral Rate, No Return to Negative Rates or Trillions in Negative Bonds

Sep 18, 2024, 07:03 PM

Federal Reserve Chair Jerome Powell has indicated that the neutral rate, the interest rate that neither stimulates nor restrains economic growth, is likely significantly higher than it was before the pandemic. Powell expressed that he does not expect the economy to revert to the low neutral rates seen in the past, signaling a shift in long-term economic expectations. He emphasized that the Federal Reserve's decisions are not influenced by politics but are made to support the economy on behalf of the American people. Powell also stated that he does not foresee a return to negative rates for long-term bonds, nor to the era where trillions of dollars of sovereign bonds traded at negative rates.