In speeches this week, Chicago Fed President Austan Goolsbee and Federal Reserve Governor Michelle Bowman discussed differing views on the neutral interest rate. Goolsbee argued that further rate cuts would be needed to reach a neutral rate “well below where we are currently,” while Bowman suggested that the Fed might be closer to a neutral policy stance than previously thought.
The difference in views is not surprising, given that in September’s forecast, Fed officials anonymously estimated the neutral rate range to be between 2.375% and 3.75%, according to Will Componolle of FHN Financial.
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