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neutral interest rate
Trends
- 1
Oil prices holding above $100 a barrel are prompting central banks to reconsider their estimates of the neutral interest rate — the level that neither stimulates nor restricts the economy. Sustained energy costs keep inflation elevated, which could mean rates need to stay higher for longer than previously assumed.
- 2Markets weigh a neutral rate much like one from decades past▼Morning Bid: A new neutral rate, much like a decades-old one
Reuters' Morning Bid column examines the idea of a new neutral interest rate for the global economy, noting it looks much like the neutral rate of decades past. The piece frames current central bank debates about where rates should settle over the long run, and how policymakers and investors are recalibrating assumptions about borrowing costs as inflation pressures ease.