Waller Says Fed Rates Remain Well Above Neutral Level

Federal Reserve Governor Christopher Waller said current interest rates are still at least 50 basis points above the neutral level, indicating there is room for further rate cuts. His estimate of the neutral rate sits in the lower half of the Fed’s median projection, which is around 3 percent.

Waller explained that policy rates are roughly 50 to 100 basis points above neutral, meaning monetary policy remains restrictive and continues to weigh on economic activity. The neutral rate represents the level at which interest rates neither stimulate nor slow the economy.

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