There’s an obsession out there with determining “r-star”, the “non-inflationary interest rate”. If central bank policy rates equal r-star, then inflation neither rises nor falls. But, if policy rates exceed r-star then policy is considered restrictive and inflation should fall. If below, then policy is accommodative and inflation should rise.
y r U stars not aligning?
y r U stars not aligning?
y r U stars not aligning?
There’s an obsession out there with determining “r-star”, the “non-inflationary interest rate”. If central bank policy rates equal r-star, then inflation neither rises nor falls. But, if policy rates exceed r-star then policy is considered restrictive and inflation should fall. If below, then policy is accommodative and inflation should rise.